Concepts

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Perfect Competition


http://en.wikipedia.org/wiki/Perfect_competition 


Infinite buyers and sellers: An infinite number of consumers with the willingness and ability to buy the product at a certain price, and infinite producers with the willingness and ability to supply the product at a certain price.
Zero entry and exit barriers: A lack of entry and exit barriers makes it extremely easy to enter or exit a perfectly competitive market.
Perfect factor mobility: In the long run factors of production are perfectly mobile, allowing free long term adjustments to changing market conditions.
Perfect information: All consumers and producers are assumed to have perfect knowledge of price, utility, quality and production methods of products.
Zero transaction costs: Buyers and sellers do not incur costs in making an exchange of goods in a perfectly competitive market.
Profit maximization: Firms are assumed to sell where marginal costs meet marginal revenue, where the most profit is generated.
Homogenous products: The qualities and characteristics of a market good or service do not vary between different suppliers.
Non-increasing returns to scale: The lack of increasing returns to scale (or economies of scale) ensures that there will always be a sufficient number of firms in the industry.
Property rights: Well defined property rights determine what may be sold, as well as what rights are conferred on the buyer.
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