3.4.2 Perfect Competition

Question 1

Outline perfect competition and give an example

Answer 1

-a market where there is a high degree of competition
- e.g. agriculture

Question 2

What are the characteristics of perfect competition?

Answer 2

1. There must be many buyers and sellers
2. Therefore must be freedom of entry and exit from the industry
3. There must be perfect knowledge
4. The product must be homogenous