What do you understand by perfect competition market? What are the sha

1.	What do you understand by perfect competition market? What are the shape of Average and Marginal Revenue Curves of firm in this market?
Answer» Perfect competition refers to the position of a market in which there are large number of buyers and sellers of a large homogeneous product. The price of the product is determined by the demand and supply forces of the market. The maximum output that a personal firm can produce, is relatively small for the total demand of the industry’s product so that it can not influence the price by changing the supply of the output. With this, many companies are in a position to influence the price of the product. The average and marginal curves in such market are the same, which is a straight line parallel to the X axis.

What do you understand by perfect competition market? What are the shape of Average and Marginal Revenue Curves of firm in this market?

Answer»

Perfect competition refers to the position of a market in which there are large number of buyers and sellers of a large homogeneous product. The price of the product is determined by the demand and supply forces of the market. The maximum output that a personal firm can produce, is relatively small for the total demand of the industry’s product so that it can not influence the price by changing the supply of the output. With this, many companies are in a position to influence the price of the product.

The average and marginal curves in such market are the same, which is a straight line parallel to the X axis.

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