Explain the implications of freedom of entry and exit of the firms und

1.	Explain the implications of freedom of entry and exit of the firms under perfect competition.
Answer» An important feature of a perfect competition is freedom of entry and exit to the firms. An entrepreneur who has the necessary capital and skill can start any business of his choice. In every industry, new firms are therefore opened from time to time. Similarly in a market of perfect competition, any existing producer is free to close down his business if he so choose. As a result, some firms are going out of industry. Since there is no hindrance to the entry of new firms and exit of existing firms, the total number of firms under perfect competition remains very large.

Explain the implications of freedom of entry and exit of the firms under perfect competition.

Answer»

An important feature of a perfect competition is freedom of entry and exit to the firms. An entrepreneur who has the necessary capital and skill can start any business of his choice. In every industry, new firms are therefore opened from time to time.

Similarly in a market of perfect competition, any existing producer is free to close down his business if he so choose. As a result, some firms are going out of industry. Since there is no hindrance to the entry of new firms and exit of existing firms, the total number of firms under perfect competition remains very large.

Discussion

No Comment Found

Related InterviewSolutions

What were the two main occupations of the Rig Vedic Aryans?
Name the two political institutions which exercised check on the powers of the King in the Rig Vedic period.
What w’as the position of women in the Rig Vedic age ?
Describe the social life of the Rig Vedic Aryans with reference to the following: (a) The Family Structure (b) Position of Women (c) Varna System
With reference to the following explain the main features of the Rig Vedic Economy: (a) Agriculture (b) Domestication of Animals (c) Trade Transactions, Crafts and Transportation
Mention any two archaeological sources to reconstruct the later Vedic Age.
Mention any two of the Ashrams in the life of a man in Aryan society.
What information do we gather from the later Vedic literature in respect of: (a) Spread of Vedic Civilization to many New Regions. (b) Role of Iron in later Vedic Economy.
Mention briefly the rituals and sacrifices of the later Vedic Aryans?
What is the message of the Bhagavad Gita?