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Criticize the following statement: “Since small businesses face competitive markets, we can apply the theory of...

Criticize the following statement: “Since small businesses face competitive markets, we can apply the theory of perfect competition to any field of small business.” Give examples to illustrate your criticism.

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Answer #1

Answer - I do not agree with the given statement . Though the large number of small businesses may be competitive in nature , but it is wrong to say that the theory of competitive advantage may be applied to all small businesses. Many of the small businesses open in the side of roads , try to sell the differentiated products and offer different kind of customer services in order to attract the customer. This becomes the quality of the monopolistic market. Hence the theory of competitive market cannot be applied to all the small businesses.

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