What characteristics of a competitive market do they have

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Reference no: EM132200103

Question: According to economists, a perfectly competitive market is the best way to allocate the resources of an economy. In this type of market, the use of resources easily and readily move to the products and services with the highest demand. This type of market provides producers with a high enough price to earn a normal profit but no more in the long run.

Consider the three characteristics of the perfectly competitive market:

1. Many small firms.

2. A homogenous product; a commodity

3. Very easy entry into and exit form the market

4. Each firm in the market is a price taker, and can sell as much as it wants at the going price.

Comment on the following questions:

Do you think that a perfectly competitive market is possible, and if so, why? If no why not?

Are there any markets for goods or services that are close to a perfectly competitive market? What characteristics of a perfectly competitive market do they have?

Reference no: EM132200103

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