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The Necessary Conditions for a Perfect Competition Homework Answers
A Perfect Competition is a form of market structure which is considered as an ideal situation. It is considered ideal due to the nature of efficiency in allocation of resources and productivity.
Conditions which are necessary for a Perfect Competition Assignment Answers:
- A large population of sellers and buyers:
In a Perfect Competition Assignment Answers there are a large number of sellers and buyers. This is commonly seen in most of the markets in an economy. An important factor here is the willingness of the buyers to purchase the products and the willingness of the sellers to sell the products.
- Information and Knowledge:
It is assumed that the consumers or the buyers have the correct and appropriate information about the products, its price and usage. This is fundamental to attract customers in a huge market place. It is also essential that the consumers are aware of their needs and requirements.
- Homogeneity of the products:
The products in the market are perfect substitutes of each other and have the same features and characteristics. Thus, they cannot be differentiated and the consumers have the same choice of products irrespective of the sellers.
- Profit Maximization objective of the sellers:
Every seller has the objective to maximize their profits over the cost of production incurred. Thus, they try to gain the most customers to ensure that they are able to capture a fair amount of the market share.
- The market share of each seller:
Each seller in the market has the same market share due to the homogeneous nature of their products. In order to differentiate from each other, the sellers have to engage in different marketing strategies.
- Differentiation Strategies:
Due to the lack of difference in their products when it comes to their features and usages, the sellers have to engage in various differentiation strategies. These strategies include promotional activities, customer service, discounts and loyalty schemes.
- No barriers to enter or exit the market:
In a Perfect Competition Homework Answers, there are no barriers when it comes to enter or exit the market. This helps to equalize the competition in the market and reduce the chances of a Monopoly or Oligopoly to take place.
- Price Takers instead of Price Makers:
Unlike the Monopoly or Oligopoly, the Perfect Competition Homework Answers is known for being a Price Taker. This is because of the large number of rivals selling homogeneous products. The price of the products is one of the basis used to differentiate oneself from the other sellers in the market.
- Absence of additional costs:
There are no additional costs when it comes to the price of the products. No transportation costs or processing charges are added to the price of the product.
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