The paper “ Characteristics of a Perfect Competition in Business” is an outstanding variant of the essay on macro & microeconomics. Economists have identified the different types of market structures like monopoly, monopolistic competition, perfect competition, and oligopoly. All the market structures provide a different framework in which business is carried. The paper compares and contrasts the perfect competition and monopoly market by determining the way the resources are allocated. This helps to develop important findings and determine the efficiency in which the players in the market perform. Before moving on it is important to define the key termsDemand: Quantity of goods a consumer is willing to purchase at a particular price. Aggregate Demand: Total market demand for goods at a certain price.
It is the sum of the total individual demands and gets affected by a change in price. Supply: Quantity of goods a supplier is willing to supply at a particular price. Aggregate Supply: Total market supply of goods at a certain price. It is the sum of the total individual supply and gets affected by a change in price. Perfect Competition is a market structure that is rarely a reality as there exists some information that is not available with all the individual players.
It provides a framework based on which other market structures can be judged. A monopoly is another form of market structure that exists in some form and is price setters. Both this type of market provides a framework for the players to use the available resources and hold an extreme position in the market structure chart as shown below (Perfect competition, 2010)Thus the above chart demonstrates the market structure chart and holds extreme position thereby highlighting a few situations when such a situation exists. Perfect Competition is a type of market structure where there are many players, have homogenous products, there is freedom of entry and exit and also complete information is available about the product in the market.
This is evident from the following example
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