Question

In this chapter we have seen that purely competitive industries are efficient and therefore maximize benefits to society. However, pure competition means that the product is homogeneous. The only reason that pure competition is efficient is because the goods are homogenous. Homogeneous goods are exactly the same and therefore, efficiency is achieved at the cost of choice. Do you think that it is better to be efficient or to have a choice about prices, color, size, etc.? Why or why not? Do you feel that choices about a good help to offset the inefficiencies?

Answer 1

It is better to have a choice about prizes, colour, size and different other attributes because consumer preference is not similar and that the economy is revolutionizing each day. In today's time having a purely competitive industry is very difficult as every entrepreneur has a different strategy to follow for the product. The needs of the wide variety of consumers based on their tastes and preferences, income, lifestyle etc. also gets fulfilled with variety in the products. The choice about the goods do helps in offsetting the inefficiencies because, under perfect competition, the scarce resources are not put to their best use. With innovation and changing technologies, the limited resources can be put to best use by bringing some changes in the products.