Question

Explain (I) Perfect knowledge (II)Perfect mobility

Answer 1

Explanation:

In a perfectly competitive market, all the firms produce and supply the identical products. It means that the products of all the firms are perfect substitutes of each other. As a result of this, the price elasticity of demand for a firm's product is infinite.

Answer 2

Answer:

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Perfect knowledge means that both the buyers and sellers are fully informed about the market price. Its implication is that no firm is in a position to charge a different price and no buyer will pay a higher price. As a result, a uniform price prevails in the market. ... Hence all the firms have uniform cost structure.

The factors of production are perfectly mobile in perfect competition. This means that they can freely move from one firm to another. Also, workers are free to move between different firms. Therefore, people can learn skills easily.

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