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 trade place organize because it supports the actual ideology of a unaffixed market frugality where, for example there is no organization intervention. The entrepreneur in blameless competition whole rig and caboodle independent of other entrepreneurs and all(prenominal) individual buyer or seller does not bias the market, there are finished 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 unattackables. Both the consumers and producers stand a double-dyed(a) knowledge of market see to its. The demand dilute 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 most stable market form, and hence the most desirable. It leads to the go rough possible effic iency for the firm. It flora best for both the buyers and sellers and works in accordance to each persons needs and abilities. It is a characterise 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 nigh modern industry because life in the economic humanity can neer be perfect.

There can never be a market fuddled to having perfect conditions for competition. It is legitimate that many markets, such as the ones for raw materials come tightlipped to being in perf ect competition, they can never really achi! eve perfect competition. This is due to many factors but particularly the dissatisfaction of the characteristics of a perfect competition market as amplify 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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