Question

Explain the benifits customers enjoy from competitive markets.

Answer 1

In competitive markets there is a large number of buyers and sellers and there is perfect information. In perfect competition the firm is a price taker that doesn’t allow it to set the price. If any firm charges price higher than the market price it will not be able to sell its product. This benefits the customers who receive the goods and services at a price at which the firms get only normal profit. They also have information about the prevailing price due to perfect information and doesnot falls in the trap of price discrimination.