Explain the assumptions behind perfect competition and how firms behave under this market structure.
Perfect competition assumes that everyone has perfect information (no asymmetries). In addition, under perfect competition, there are many firms selling a homogeneous product. No one firm can have an effect on price, thereby implying that each supplier is a price taker (rather than a price setter). Price is set at marginal cost.
TR
Related Economics A Level answers
All answers ▸How does an increase in the interest rate affect the level of investment?
What is Quantitative Easing and evaluate how it impacts an economy?
The UK suffers from a persistent balance of trade deficit. what can the government do to rectify this and balance the trade figures?
What is the impact of a price ceiling on a market equilibrium?