What is perfect competition market? Why is demand curve for a firm perfectly elastic in perfect competition? Explain.
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Which of the following statements is incorrect?
(a) Even monopolistic can earn losses.
(b) Firms in a perfectly competitive do not face any barrier in their entry or exit.
(c) It is always beneficial for a firm in a perfectly competitive market to discriminate price.
(d) Kinked demand curve is related to an oligopolistic market.
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A perfect competition market happens when the companies sell many products but cannot determine their prices.
The demand curve for a firm is perfectly elastic in perfect competition because the firm does not determine price so the increase in price does not depend on demand.
What is the role of the perfect competition market?
- In a perfect competition market, the supply and demands of any product remain the same because there are a large number of buyers and sellers
- This market cannot innovate better products
- The profit in this market remains the same if the production increases
- In a perfect competition market, the government regulate the product's cost and also control the firm enters into this market
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