Explain three basic assumption of market equilibrium under perfect competition .
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The model of perfect competition is based on the following assumptions.
✨Large numbers of sellers and ✨buyers: ...
✨Product homogeneity: ...
✨Profit maximization: ...
✨No government regulation: ...
✨Perfect mobility of factors of production: ...
✨Perfect knowledge:
Perfect competition refers to a market situation in which there are large number of buyers and sellers of homogeneous products. ... There must be one price prevailing throughout the market. Thus, perfect competition in a market structure is characterized by the complete absence of rivalry among individual firms.
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____________HEY MATE___________
ASSUMPTION OF MARKET EQUILIBRIUM UNDER PERFECT COMPETITION-----------
⚫PRICE AND QUNTITY SUPPLIED ARE POSITIVELY RELATED,SUPPLY CURVE OF A COMMODITY SLOPES UPWARD FROM LEFT TO RIGHT.
⚫PRICE AND QUNTITY SUPPLIED ARE NEGATIVELY RELATED,DEMAND CURVE OF COMMODITY SLOPES DOWNWARD FROM LEFT TO RIGHT.
⚫FORCES OF SUPPLY AND DEMAND OPERATE FREELY WITHOUT ANY GOVERNMENT INTERVENTION.
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