Perfect competition 1

Perfect competition

• Less buyers

• Less seller

• Large buyers and sellers

Perfect competition

Products

• Different

• Homogenous

Perfect competition

Price

• Not defined

• Different price

• Uniform price

Perfect competition

Firm earn in long run

• Abnormal loss

• Abnormal profit

• Normal profit

Perfect competition

New firm

• Can not enter

• Free entry

• Strong barriets

In perfect competition

If existing firm earning abnormal profit

• Supply decrease

• Supply increase

• Price increases

In perfect competition

Existing firm incurring abnormal loss

• Prices decrease

• Price increases

• No change in price

In perfect competition

Firm earn in long run

• Abnormal profit

• Abnormal loss

• Normal loss

• Normal profit

In perfect competition

Implications of homogenous product will be

• Different price in market

• Uniform price

In perfect competition

Price determined by

• Seller

• Buyer

• Government

• Market forces of demand and supply