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State with reasons whether you agree or disagree with the following statements:Single price prevails in perfect competition. |
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Answer» Yes, I agree with this statement. Single price prevails under perfect competition because. 1. In perfect competition there are large number of buyers and sellers. A single seller nor a single buyer can influence the supply nor the demand and the price. 2. In perfect competitive market price is determined by the interaction of the forces of demand and supply. 3. Hence sellers and buyers are ‘Price takers’ only. 4. Products sold in perfectly competitive market are homogeneous, and hence uniform or single price rules throughout the market for that product and also there is no selling cost incurred. 5. There is perfect knowledge on the part of buyers and sellers about market conditions, which prevents price – discrimination, so single price prevails. 6. Transport costs are ignored under perfect competition. If transport costs are involved then the prices of homogeneous goods would tend to differ. |
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