PERFECT COMPETITION Meaning and
Definition
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Perfect competition is an economic market structure in which numerous buyers and sellers participate in the exchange of goods or services. In this type of market, no single buyer or seller has the power to influence the price of the product, and all participants have perfect knowledge about the market conditions, including prices, quality, and availability of products.
In a perfectly competitive market, there are several defining characteristics. First, there are a large number of buyers and sellers in the market, with each having a relatively small market share. This ensures that no individual buyer or seller has significant control or influence over the market price. Second, the products or services being offered are homogeneous, meaning they are identical in terms of quality, features, and attributes. This promotes market transparency and ensures that consumers can easily compare prices and select the product that offers the best value. Third, there is free entry and exit for firms, allowing new competitors to enter the market and existing ones to leave if they become unprofitable.
Moreover, perfect competition assumes that buyers and sellers have perfect knowledge about the market. This means that buyers are aware of all available options and prices, while sellers have complete information about the demand and supply conditions. Finally, perfect competition assumes that there are no barriers to market entry, such as government regulations or patents, and that the market is characterized by price takers, meaning that sellers must accept the prevailing market price rather than setting their own.
In summary, perfect competition is a market structure in which numerous buyers and sellers engage in the exchange of homogeneous products, where no single participant can influence the market price.
Common Misspellings for PERFECT COMPETITION
- oerfect competition
- lerfect competition
- 0erfect competition
- pwrfect competition
- psrfect competition
- pdrfect competition
- prrfect competition
- p4rfect competition
- p3rfect competition
- peefect competition
- pedfect competition
- peffect competition
- petfect competition
- pe5fect competition
- pe4fect competition
- perdect competition
- percect competition
- pervect competition
- pergect competition
- pertect competition
Etymology of PERFECT COMPETITION
The term "perfect competition" is derived from the combination of two distinct words: "perfect" and "competition".
1. Perfect: The word "perfect" originates from the Latin word "perfectus", which means "completed" or "finished". Over time, the term evolved to signify excellence, flawlessness, or the highest attainable quality.
2. Competition: The word "competition" comes from the Latin word "competitio", which is derived from the verb "competere". "Competere" combines "com" (meaning "together" or "with") and "petere" (meaning "to seek" or "to strive"). Thus, competition denotes a situation where multiple individuals or entities strive together to achieve a particular goal.
