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Explain the implication of "Perfect Knowledge about Market" under perfect competition. |
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Answer» ‘Perfect Knowledge implies that buyers are fully aware of price in market and sellers of technique of production. Knowledge by buyers further implies that no buyers is willing to pay a higher price for the product of any firm. Knowledge by sellers implies that cost of production is same for all producers. Detailed Answer: 'Perfect Knowledge about Market' means both buyers and sellers are fully informed about the market prices. Therefore, no firm is in a position to charge a different price and no buyer will pay a higher price. As a result, a uniform price prevails in the market. |
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