1.) what are the characteristics of a firm or industry in perfect competition 2.) what is...
1.) what are the characteristics of a firm or industry in perfect competition
2.) what is the shape of the demand curve?
3.) Is it possible for a firm in perfect competition to earn economic profits in the long-run? Why or why not?
4.) Can you describe an example of a firm or industry in the market structure?
Homework Answers
QUESTION : What are the characteristics of a firm or industry in perfect competition?
ANSWER : Perfect competition is a market structure in which there are large number of sellers selling homogeneous products and also large number of buyers. Both buyers and sellers cannot influence the market price in a perfectly competitive market.
Characteristics of a firm or industry in perfect competition
1. There will be large number of firms.
2. Since sellers cannot influence market price, they are price takers.
3. Firms or industries sell homogeneous or identical commodities.
4. Firms have the freedom to enter and exit the industry and there is no barriers.
5. Perfect knowledge about information regarding price and technology.
6. Transaction costs are absent.
7. Factors of production are perfectly mobile.
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