How do you think consumers would react in such a scenario? Consumers will choose to buy from the company that provides apples at a lower price as it is the same product. If the company decided to set a high price, another company would enter the market and offer apples for a lower price. The number of sellers and goods exchanged in the market, and the price, depends on the type of market.įor example, think about an agricultural company that sells apples there are many apples out there. A market is where buyers and sellers meet and exchange goods and services. The definition of a perfectly competitive market is a market that consists of many buyers and sellers, and none of them are capable of influencing the price. Read on to find a definition of a perfectly competitive market, and find out whether it exists or not in the real world.
More specifically, the price that the perfectly competitive market sets it. Hence, you choose to take the price as the market sets it. On the other hand, you can't afford to set it at a lower price. If all the rules we set above were applied, how would you set the price of the good you're selling? If you try and sell at a higher price than your competitors, you will be out of the market in no time. If you were in such a market, it would mean that you are in a perfectly competitive market. Other sellers can enter the market at any time and compete with you. Imagine you were a seller in a market that has infinitely many other sellers.
Behavioural Economics and Public Policy.
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