What are the economic assumptions for a perfectly competitive market?
There are four fundamental assumptions which must all be satisfied:
There must be many buyers and sellers in the market and they all have to be price takers. That is to say, none of them are large enough to affect the market price.There are no barriers to entry or exit.Buyers and sellers have perfect information of prices such that there are no asymmetric information in the market. All firms produce a homogeneous product
PW
Related Economics A Level answers
All answers ▸What is Pareto efficiency?
What is the impact of a fall in the central bank interest rate on the macroeconomic performance of the UK economy?
Analyse three consequences of high inflation on individuals in the UK
A product with perfectly elastic supply has sales of 100 units per week at a price of £2 per unit. Price elasticity of demand is(-)1 .5 over the relevant range. The government imposes a tax 20%. What will be the government’s weekly tax revenue?