Question

Q7. WHAT ARE THE 3 MAIN FEATURES OF THE PERFECTLY COMPETITIVE ECONOMY? ANSWER ALL IN 3 BULLET POINTS AND GIVE EXAMPLES IN 2 OTHER POINTS TO GET THE FULL 5 MARKS (EACH BULLET POINT HAS 1 MARK = 5 MARKS)

Answer 1

• If we talk about a perfect competitive market then in this type of market then price is only decided only by the market forces that is demand and supply and not by the buyers and sellers
• there are no barriers to entry and exit in this market
• it is assumed that both buyers and sellers and full knowledge about the market
• There is no transportation cost in this market
• The products are homogeneous in nature
• If we talk about the best example of perfect competition market then it can be fruit or vegetable market in which every firm has almost similar type of fruits or vegetables that are similar in terms of shape, size, colour etc
• Other example of this type of market can be internet