Singular Product The prime characteristic of perfect competition is the existence of one single product that is sold by all suppliers at a common price, with the quality of the product being the same. This implies that the product is purchased from a supplier does not affect the buyers because of its same price and quality. Innumerable Buyers and Sellers The number of buyers and […]

Abstract The theory of perfect competition is a theoretical structure of market that is principally used as the benchmark against which some other real-life structures of markets are measured. Several economists have argued that the theory is not perfect itself and cannot exist or be applied in the real world. Perfect competition can only exist in a world where time is not moving, and that […]

Equality and Inequality Under Perfect Competition The mythical world of perfect wage equality Under certain very strict assumptions, a perfectly competitive market will lead to perfect equality of wage rates. All workers will earn exactly the same. These strict assumptions are as follows: All workers have identical abilities. There is perfect mobility of labor. All Jobs are equally attractive to all workers. All workers and […]

Campbell et al (2005) defines the marginal cost of production as a measure of the changes in production cost if one extra unit is produced and it helps to determine the optimum level of production. As for our case of Chevrolet caprice by producing their current volume their cost is lowest at $ 12500 and if they increase they production volume while keeping all the […]

Perfect Competition In economic theory, perfect competition describes markets such that no participants are large enough to have the market power to set the price of a homogeneous product. Because the conditions for perfect competition are strict, there are few if any perfectly competitive markets. Still, buyers and sellers in some auction-type markets, say for commodities or some financial assets, may approximate the concept. Perfect competition serves as a benchmark against which to […]