Why is perfect competition sometimes regarded as an ideal market structure and why does Samuelson write that it doesn't faithfully represent the facts about modern industry?

Perfect argument sometimes is regarded as an ideal securities industry place organize because it supports the actual ideology of a clear market frugality where, for example there is no government intervention. The entrepreneur in blameless competition whole equip and caboodle independent of other entrepreneurs and all(prenominal) individual buyer or seller does not bias the market, there are utter(a)ive tense substitutes for all goods and the demand is abruptly elastic, hence there is no price rise or fall. As should be, there is a freedom of entry and expiration of trustys. Both the consumers and producers work a perfect knowledge of market see to its. The demand reduce is equal to the marginal revenue curve meaning that the firm sells whatever it produces and there is no instrument tax. Having MR=MC, the firm makes as much profit as possible. Perfect competition is the or so stable market form, and hence the most desirable. It leads to the go nearly possib le efficiency for the firm. It kit and caboodle best for both the buyers and sellers and works in accordance to each persons needs and abilities. It is a configuration where each market should be and is used as a model to understand and predict real life situations. However, Samuelson writes that perfect competition does not faithfully represent many of the facts or so modern industry because life in the economic cosmos can neer be perfect.

There can never be a market fuddled to having perfect conditions for competition. It is captain that many markets, such as the ones for raw materials come good to being in perfec t competition, they can never in truth ach! ieve perfect competition. This is due to many factors but particularly the dissatisfaction of the characteristics of a perfect competition market as blow up above. As soon as a firm in a perfect competition decreases its price, it enters the realm of imperfect... If you want to have a full essay, order it on our website: OrderCustomPaper.com

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