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Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364

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BuyFindarrow_forward

Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364
Textbook Problem

What are the four basic assumptions of perfect competition? Explain in words what they imply for a perfectly competitive firm.

To determine

The basic assumptions of perfect competition and its implication to a firm in that market.

Explanation

Perfect competition is that market structure where there exists a utopian way of market functioning. This market is based on the four basic assumptions which are as follows,

a) There are a large number of buyers and sellers

b) The product is homogeneous

c) There are no barriers to entry and exit

d) There exists full market information.

These assumptions are the basis on which perfect competition market functions...

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