1. at that place is perfect knowledge for solely buyers and buyers and sellers.
2. There ar a large number of buyers and sellers
3. There ar no barriers to entry
4. The goods produced in utterly competitive markets are homogenous.
Since all the products are akin, there is no brand devotion and this put forwards it a perfectly elastic demand curve. Which means that a small change in price could cause a lot of change in the quantity demanded.
This makes D sightly revenue.it also makes it the marginal revenue curve since every m they sell an spare unit the same come up of extra revenue comes in.this is unique to this kind of market structure.
Only in the short run can a firm make an abnormal profit because in the long run unexampled business would enter the market. This is because in a perfect competition there is no barriers to entry and there is perfect knowledge. These firms are attracted by the abnormal profits. The entry of the new businesses will carry the supply from s-s1 where by reducing the price of the product. And as the price falls the abnormal profit of the firm is eroded.
The new D is also known as the long run symmetricalness. The longrun equilibrium tends to be steady since as the number of businesses in the persistence increases the supply increases decreasing the price of the product. This leads to businesses leaving the industry cod to less profitability.
Since the demand is at the lowest point of the ordinary cost the firm is in productive efficiency. The firms allocate the same amount of extra cost as the customers allocated the same amount of extra revenue there is also allocative efficiency. Some examples of perfectly competitive industries are agricultural products and foreign exchange markets.If you emergency to get a full essay, order it on our website: Orderessay
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