The market structure in which there are numerous sellers in the
market, offering similar goods that are produced using a standard method and
each firm has complete information regarding the market and price, is
known as a perfectly competitive market. The entry and exit to such a market
are free. It is a theoretical situation of the market, where the
competition is at its peak.
The firms are price takers in this market structure, and so, they do
not have their own pricing policy. The individual buyers and sellers have
no control over the prices. Therefore, the sellers have to accept the
price ascertained by the demand and supply forces of the market and sell the
product, as much as they can at the price prevailing in the market. As the
product offered for sale is identical in all respects, no firm can increase the
price than that of prevailing in the market, because if a firm increases
its price, then it will lose all the demand, to the competitors.
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