What are the assumptions of perfect competition?

Large number of firms and consumersEach firm is a price-taker and hence has no price setting powerThe price is determined in the market by supply and demandProducts are homogenous and are therefore perfect substitutesThere are no barriers to entry or exit and the cost of advertising and transport is assumed to by zero- there is complete mobility of resourcesAll firms and consumers have perfect informationNormal profits are made in the long runNo externalities of production or consumption

EB
Answered by Emily B. Economics tutor

1729 Views

See similar Economics A Level tutors

Related Economics A Level answers

All answers ▸

What is expansionary fiscal policy and what effect does it have?


Define a firm's shutdown point, and explain it intuitively using an example


What are the potential disadvantages of Trades Unions?


Explain the difference between short term growth and long term growth


We're here to help

contact us iconContact ustelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo

© MyTutorWeb Ltd 2013–2025

Terms & Conditions|Privacy Policy
Cookie Preferences