Difference between revisions of "Perfect competition"
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| − | '''Perfect competition''' is an economic term referring to the condition that there is so much competition between vendors that a [[seller]] would lose customers if he raised prices at all. Such a competitive market is very good for the [[consumer]]. | + | '''Perfect competition''' is an economic term referring to the condition that there is so much competition between vendors that a [[seller]] would lose customers if he raised prices at all. Such a competitive market is very good for the [[consumer]]. A perfectly competitive market must: |
| + | |||
| + | *Have products which are perfect [[substitutes]] for each other. | ||
| + | *Have many companies in the market. | ||
| + | *All the companies must have identical costs for their supplies. | ||
| + | *The consumers must be fully informed about the products. | ||
The [[market]] for [[dairy]] products is close to perfect competition. | The [[market]] for [[dairy]] products is close to perfect competition. | ||
Revision as of 14:30, May 22, 2007
Perfect competition is an economic term referring to the condition that there is so much competition between vendors that a seller would lose customers if he raised prices at all. Such a competitive market is very good for the consumer. A perfectly competitive market must:
- Have products which are perfect substitutes for each other.
- Have many companies in the market.
- All the companies must have identical costs for their supplies.
- The consumers must be fully informed about the products.
The market for dairy products is close to perfect competition.