What can be wrong about a perfectly competitive equilibrium?
Perfect competition market is a
market where competition is at the highest level. Everyone has
perfect knowledge about the product. The product is homogeneous and
there are free entry and exit.
(1). In a perfectly competitive market, there is
no competition over there.
(2). No one can influence the price of any
commodity.
(3). As there is no competition so there is no
advertisement over there.
(4). Price is determined by an impersonal force
which has no control of household and firms.
(5). At equilibrium, all buyers and sellers are
dealing with those prices which they can do.
(6).There is free entry and exist so a new firm is
attached to those firm which has supernormal profit and as a result
profit is down to normal.
(7). This framework has no self-independence, no
self-decision.
(8). Everyone charges the same price so there is
P=MC and it follows by every firm so that society pays for the last
unit of output.
(9). In this market there is homogeneous
production there is no variety product in this market.
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