Economics Welfare Economics Questions
Perfect competition is a market structure characterized by a large number of buyers and sellers, homogeneous products, perfect information, free entry and exit, and no individual buyer or seller has the ability to influence the market price. In perfect competition, all firms are price takers, meaning they have no control over the price and must accept the prevailing market price. Additionally, there are no barriers to entry or exit, allowing new firms to enter the market and existing firms to exit if they are not profitable. This ensures that there is no long-term economic profit in the industry. Perfect competition is considered to be an ideal market structure as it promotes efficiency, allocative and productive efficiency, and consumer welfare.