# data[].attributes.body
The role of the Buyer is to purchase or invest in goods in services, whereas the role of the seller is to provide goods and services to buyers in a way that will make buyers want to spend their money. Both parties need each other for the relationship to stay strong as if either one stops providing their resources then there could be an economic collapse, a business could go under, or someone could not be provided with something they need. It is the relationship between the buyer and the seller that keeps the Economy afloat.

https://clipartfest.com/categories/view/60a40e9e9a8a49fddd590b79edf434c7bce2d80c/public-market-clipart.html

# data[].attributes.body
Economics is the study of human behavior regarding how they want to fulfill their infinite wants with their limited resources. People have a limited amount of money and they want/need to spend it on goods and services.  The goal of Economics is to study what affects their buying behaviors and try to capitalize on it to become profitable or competitive in a market.

http://library.mcla.edu/economics

# data[].attributes.body
In a perfect competition amongst sellers, prices and the supply of a product or service would be the same. Unfortunately, the market is never perfect and businesses usually make products that are different from their competitors and try to sell it differently, to control a larger portion of the market. Because of this, consumers are given a wide choice of goods and services they can invest their money into. That is unless the competition has been cast out and monopoly is formed.
http://www.investopedia.com/terms/p/perfectcompetition.asp

# data[].attributes.attachment_link.readable_text
What Is Perfect Competition?

Pure or perfect competition is a theoretical market structure in which the following criteria are met: all firms sell an identical product (the product is a "commodity" or "homogeneous"); all firms are price takers (they cannot influence the market price of their product); market share has no influence on price; buyers have complete or "perfect" information - in the past, present and future - about the product being sold and the prices charged by each firm; resources such a labor are perfectly mobile; and firms can enter or exit the market without cost.

This can be contrasted with the more realistic imperfect competition, which exists whenever a market, hypothetical or real, violates the abstract tenets of neoclassical pure or perfect competition. Since all real markets exist outside of the plane of the perfect competition model, each can be classified as imperfect. The contemporary theory of imperfect versus perfect competition stems from the Cambridge tradition of post-classical economic thought.
[Important: in reality, perfect competition does not exist, but highly competitive and liquid markets for like commodities, such as oil or wheat, are the closest real-world examples.]
How Perfect Competition Works

Perfect competition is a benchmark, or 'ideal type', to which real-life market structures can be compared. Perfect competition is theoretically the opposite of a monopoly, in which only a single firm supplies a good or service and that firm can charge whatever price it wants since consumers have no alternatives and it is difficult for would-be competitors to enter the marketplace. Under perfect competition, there are many buyers and sellers, and prices reflect supply and demand. Companies earn just enough profit to stay in business and no more. If they were to earn excess profits, other companies would enter the market and drive profits down.

Perfect Competition is characterized by the following attributes:

All firms sell an identical product.

All firms are price-takers.

All firms have a relatively small market share.

Buyers know the nature of the product being sold and the prices charged by each firm.

The industry is characterized by freedom of entry and exit (no barriers).

A Large And Homogeneous Market

There are a large number of buyers and sellers in a perfectly competitive market. The sellers are small firms, instead of large corporations capable of controlling prices through supply adjustments. They sell products with minimal differences in capabilities, features, and pricing. This ensures that buyers cannot distinguish between products based on physical attributes, such as size or color, or intangible values, such as branding. A large population of both buyers and sellers ensures that supply and demand remain constant in this market. As such, buyers can easily substitute products made by one firm for another.

Perfect Information Availability

Information about the ecosystem and competition in an industry constitutes a significant advantage. For example, knowledge about component sourcing and supplier pricing can make or break the market for certain companies. In certain knowledge- and research-intensive industries, such as pharmaceuticals and technology, information about patents and research initiatives at competitors can help companies develop competitive strategies and build a moat around its products. In a perfectly competitive market, however, such moats do not exist. Information is equally and freely available to all market participants. This ensures that each firm can produce its goods or services at exactly the same rate and with the same production techniques as another one in the market.

Absence of controls

Governments play a vital role in market formation for products by imposing regulation and price controls. They can control the entry and exit of firms into a market by setting up rules to function in the market. For example, the pharmaceutical industry has to contend with a roster of rules pertaining to research, production, and sale of drugs. In turn, these rules require big capital investments in the form of employees, such as lawyers and quality assurance personnel, and infrastructure, such as machinery to manufacture medicines. The cumulative costs add up and make it extremely expensive for companies to bring a drug to the market. In comparison, the technology industry functions with relatively less oversight as compared to its pharma counterpart. Thus, entrepreneurs in this industry can start firms with less to zero capital, making it easy for individuals to start a company in the industry.

Such controls do not exist in a perfectly competitive market. The entry and exit of firms in such a market is unregulated and this frees them up to spend on labor and capital assets without restrictions and adjust their output in relation to market demands.

Cheap and Efficient Transportation

Cheap and efficient transportation is another characteristic of perfect competition. In this type of market, companies do not incur significant costs to transport goods. This helps reduce the product's price and cuts back on delays in transporting goods.

Key Takeaways

Perfect competition is an ideal type market structure where all producers and consumers have full and symmetric information, no transaction costs, where there are a large number of producers and consumers competing with one another,

Perfect competition is theoretically the opposite of a monopolistic market.

Since all real markets exist outside of the plane of the perfect competition model, each can be classified as imperfect.

Examples of Perfect Competition

As mentioned earlier, perfect competition is a theoretical construct and does not exist in reality. As such, it is difficult to find real-life examples of perfect competition but there are variants present in everyday society.

Consider the situation at a farmer's market, a place characterized by a large number of small sellers and buyers. Typically, there is little differentiation between products and their prices from one farmer's market to another. The provenance of the produce does not matter (unless they are classified as organic) in such cases and there is very little difference in the packaging or branding of products. Thus, even if one of the farms producing goods for the market goes out of business, it will not make a difference to average prices. The situation may also be relatively similar in the case of two competing supermarkets, which stock their aisles from the same set of companies. Again, there is little to distinguish products from one another between both supermarkets and their pricing remains almost the same. Another example of perfect competition is the market for unbranded products, which features cheaper versions of well-known products. Product knockoffs are generally priced similarly and there is little to differentiate them from one another.

If one of the firms manufacturing such a product goes out of business, it is replaced by another one.

The development of new markets in the technology industry also resembles perfect competition to a certain degree. For example, there was a proliferation of sites offering similar services during the early days of social media networks. Some examples of such sites are Sixdegrees.com, Blackplanet.com, and Asianave.com. None of them had a dominant market share and the sites were mostly free. They constituted sellers in the market while consumers of such sites, who were mainly young people, were the buyers. The startup costs for companies in this space were minimal, meaning that startups and companies can freely enter and exit these markets. Technologies, such as PHP and Java, were largely open-source and available to anyone. Capital costs, in the form of real estate and infrastructure, were not necessary. (Facebook Inc.'s ( FB) Mark Zuckerberg started the company from his college dorm).

What Are the Disadvantages of Perfect Competition Models?

Perfect competition establishes an idealized framework for establishing a market. But that market is flawed and has a couple of disadvantages. The first one is the absence of innovation. The prospect of greater market share and setting themselves apart from the competition is an incentive for firms to innovate and make better products. But no firm possesses a dominant market share in perfect competition. Profit margins are also fixed by demand and supply. Hence firms cannot set themselves apart by charging a premium for their product and services.

For example, it would be impossible for a company like Apple Inc. ( AAPL) to exist in a perfectly competitive market because its phones are pricier as compared to competitors. The second disadvantage of perfect competition is the absence of economies of scale. Limited to zero profit margins means that companies will have less cash to invest in expanding their production capabilities. An expansion of production capabilities could potentially bring down costs for consumers and increase profit margins for the firm. But the presence of several small firms cannibalizing the market for the same product prevents such an occurrence and ensures that the average firm size engaged in the market remains small.

Do Firms Make Profits In A Perfectly Competitive Market?

The short answer to that question is no. Profits may be possible for brief periods in perfectly competitive markets. But the market's dynamics cancel out the effects of positive or negative profits and bring them towards an equilibrium. Because there is no information asymmetry in the market, other firms will quickly ramp up their production or reduce their manufacturing costs to achieve parity with the firm which made profits. The average revenue and marginal revenue for firms in a perfectly competitive market is equal to the product's price to the buyer. As a result, the perfectly competitive market's equilibrium, which had been disrupted earlier, will be restored. In the long run, an adjustment of supply and demand ensures all profits or losses in such markets tend towards zero.

Does Perfect Competition Exist In The Real World?

Real-world competition differs from this ideal primarily because of differentiation in production, marketing, and selling. For example, in agriculture, the owner of a small organic products shop can talk extensively about the grain fed to the cows that made the manure that fertilized the non-GMO soybeans - that's differentiation. Through marketing, companies seek to establish "brand value" around their differentiation and advertise to gain pricing power and market share. Thus, the first two criteria - homogeneous products and price takers - are far from realistic. Yet, for the second two criteria - information and mobility - the global tech and trade transformation is improving information and resource flexibility. While the reality is far from this theoretical model, the model is still helpful because of its ability to explain many real-life behaviors.

Barriers to Entry Prohibit Perfect Competition

Many industries also have significant barriers to entry, such as high startup costs(as seen in the auto manufacturing industry) or strict government regulations (as seen in the utilities industry), which limit the ability of firms to enter and exit such industries. And although consumer awareness has increased with the information age, there are still few industries where the buyer remains aware of all available products and prices.

As you can see, there are significant obstacles preventing perfect competition from appearing in today's economy. The agricultural industry probably comes closest to exhibiting perfect competition because it is characterized by many small producers with virtually no ability to alter the selling price of their products. The commercial buyers of agricultural commodities are generally very well-informed and, although agricultural production involves some barriers to entry, it is not particularly difficult to enter the marketplace as a producer.

# data[].attributes.attachment_link.description
Pure or perfect competition is a theoretical market structure in which the following criteria are met: all firms sell an identical product (the product is a "commodity" or "homogeneous"); all firms are price takers (they cannot influence the market price of their product); market share has no influence on price; buyers have complete or "perfect" information - in the past, present and future - about the product being sold and the prices charged by each firm; resources such a labor are perfectly mobile; and firms can enter or exit the market without cost.

# data[].attributes.body
The role of a Consumer in the market is to buy things that the Producers sell, to keep the market afloat. The consumer can also cause the market to shift by choosing one product over the other, thus creating an economic vote and edging out the unpopular product. However, this power to choose one product over the other must be used with a level of responsibility; or else the market may favor a product or service that isn’t right for their needs.

https://fee.org/articles/the-consumers-role/

# data[].attributes.attachment_link.readable_text
It takes little effort to be a consumer. The simple act of buying a good or service is the only requirement for entering the club of consumerism, for in the free-market economy the consumer is a special person. Unlike other economic systems, the free-market economy, in particular the free-market economy of the United States, caters to the consumer, appealing to his wants and attempting to satisfy his desires.

Each individual consumer, consciously or unconsciously, determines the fate of. the goods and services on the market each time he chooses one product instead of another. Each penny that is spent on any one product is the equivalent of an economic vote in favor of that particular product and against its competitors.

Therefore, a single consumer and his choices are important, for each consumer's economic vote, when added to the votes of other consumers, determines which consumer goods will remain on the market. Obviously, the entrepreneur will not want to manufacture product A if the consumer does not like product A and prefers to purchase product B.

Thus the reins of the free-market economy lie in the hands of the consumer.

With the possible exception of the very rich, the individual consumer has limited monetary resources and must budget his expenditures. How he determines his marginal utility will determine how much he will spend, how much he will save or invest, and on what he will make his expenditures.

However, the free-market economy depends upon more than just the consumer being able to buy a rib roast or a refrigerator when he so chooses. For the consumer lives in an intangible world of thoughts, ideas, ethics, and morals; and his attitudes toward these cultural aspects of life influence and determine his philosophies and actions. He is just as obligated to consume wisely in this intangible world as he is in the material world in which he physically lives.

Thus the reins of the free-market economy lie in the hands of the consumer. And the consumer, because he is in the driver's seat, has an obligation to consume wisely. Unfortunately, too many consumers are either unaware of this obligation or do not take it seriously, if indeed they even accept the fact that they are obligated to anyone or anything.

Man's Greatest Asset

The human mind is man's greatest asset. Without the ability to think and reason, the individual is of no use to himself or to others; for the thinking man is an active man, active in using his mind to make choices that affect not only himself but the society around him. However, unlike the instincts that birds and animals are born with, man's knowledge and understanding must be acquired through his own endeavors, for he enters this world naked mentally as well asphysically. The man who covets knowledge and understanding will find much to learn.

It is Proverbs that tells us: "Wisdom is before him that hath understanding... Get wisdom, get understanding."

By applying this thought to economics, one can see that an understanding of the free-market environment in which the consumer finds himself helps him to develop the wisdom necessary to consume wisely.

The field of communication is the link between the consumer, the entrepreneur, and the government.

King Solomon was known throughout the world for his wisdom-his common sense solutions to problems. This is not to say that all problems can be solved by using just common sense, for they cannot; but the consumer can make sensible decisions by wisely considering his possible choices.

The choices the consumer makes in the intangible world of thoughts and actions are primarily influenced by what he hears and sees.

That the forms of communication in a country are immediately taken over when a communistic or socialistic regime comes into power is evidence of the importance of communication systems. If the means of introducing ideas to the masses can be controlled, what they think and thus what they are can be controlled. By controlling the mind, one can control the body.

Thus, freedom of the press and media-newspapers, magazines, books, advertising, television, radio-is a vital necessity if this country is to maintain a capitalistic, free-market economy. The field of communication is the link between the consumer, the entrepreneur, and the government.

Promoting Intervention

One of the dangers threatening the free-market economy in the United States today is the tendency of the press and media to advocate philosophies that favor government intervention.

The consumer, instead of accepting responsibility for his lackadaisical choices, blamed everyone but himself.

Since neither the ear-gate nor the eye-gate is ever satisfied, the sound and visual media have an unlimited market for whatever they choose to present to the consumer; for the consumer is always willing to hear and see more. "Let the consumer beware" can well be applied to this situation because only the consumer himself, through wisdom and understanding, is able to accept or reject the thoughts, ideas, ethics, and morals of others which are continually being fed to him. Only the consumer himself is able to make the choice of what is wise and what is unwise. He will ultimately choose to control his own mind or will choose to let it be controlled for him by others.

Unfortunately, the consumer has not wisely considered his choices in the material world, and the foolish choices of his past are now darkening his hope for a bright future. What has cast this shadow?

The consumer, freed from the mental and physical controls placed on him during the depression of the 30s and the war of the 40s-his pocket amply filled with money-breathed a sigh of relief and moved out of his house of bricks into a house of straw. In his eagerness to spend, he no longer chose to act as a knowledgeable, well-informed, reasoning consumer and this led him into compulsive buying and unsound choices.

The problem is not to be solved by the government.

As a result, the consumer, instead of accepting responsibility for his lackadaisical choices, blamed everyone but himself. Instead of correcting a deteriorating situation by starting to consume wisely, he continued buying and complaining and did not change his habits.

Washington, which had stepped into the void created when the demand-supply free-market economy had been upset during these two decades, took note of the situation, took the entrepreneur to the woodshed, and took the consumer under its bureaucratic wing, trying to cure the consumer's very real ills with the wrong medicine-intervention in the marketplace.

Thus, the free-market economy found itself being pushed down the road which leads to socialism, for government intervention eventually leads to the elimination of the market's reason for being: the making of a profit, an effective tool by which business determines how best to serve the consumer.

While there is little doubt that some entrepreneurs will willingly "fleece" the consumer in a free-market economy, the problem is not to be solved by the government. Once the government gets its bureaucratic foot in the door, the choice the consumer may want to make may not be the choice he is allowed to make.

Consumer Responsibility

The trouble with controls in a free-market economy is that the government tends to consider the consumer right and the entrepreneur wrong. It puts most of the responsibilities for the success of the free-market economy on the shoulders of the entrepreneur and little on the shoulders of the consumer. But the free-market economy is very clear in telling the consumer that he is in control and that he has the obligation to consume wisely. However, socialism is telling the consumer to sit back and relax, that government will take over his obligations and save him the trouble of consuming wisely.

Government control is always what happens to the "other guy," never to himself.

For the intellectual consumer who values his freedom to choose and reason, the inroads socialism has made into the free-market economy of the United States under the guise of government's helping hand, should be a cause for alarm. Our capitalist economy has regressed to the point where government seemingly wants to allow only enough freedoms to give the illusion of consumer leadership and freedom in the marketplace.

As long as the majority of the consumers can be convinced that they still act as the hub of the wheel of the free-market economy, able to influence the entrepreneur to produce what they want, they are satisfied.

The consumer may even mentally reject the idea that he is being controlled through intervention in the marketplace if enough of his demands are being supplied and the decisions made by the so-called consumer protection agencies do not seriously impede his consumption. Government control is always what happens to the "other guy," never to himself. His eyes are mentally blinded, for he does not want to see.

Our founding fathers came to this country fully aware of the dictatorial nature of government controls. One of the safeguards they established was the division of power in government. They realized that each branch of government would guard its powers jealously and not surrender them to centralized control, necessary in any type of dictatorship. The various branches of the federal, state, and local governments were designed to fight to keep and preserve their governing rights. A check and balance on each other, the system itself would discourage government control. Those leaders set up our government not by accident but as a well-planned, thoughtful system, based on a constitution which divided government powers in every way possible.

Personal Freedom Requires Limited Government

Government powers in the new nation were severely controlled, for it was felt that the government's power should be limited to national defense and the court system. The only power they felt really necessary in the government was one which would permit strong enough controls to repress any person or persons who endangered the freedoms of the majority who were existing peacefully. Realizing that the government which governs best governs least, the founding fathers incorporated the principles of this idea into the constitution.

Over and over again history has shown that man's freedom is in inverse proportion to government rule, for man is only free when government is contained. The more fragmented the government, the more freedom man gains.

Our liberties and our freedoms are to be cherished and can easily be lost because they are literally tied to the apron strings of a free-market economy.

One often hears the view expressed that mankind is basically good, but in Romans, we are warned that "there is none righteous no not one" and Jeremiah adds that "the heart is deceitful above all things and desperately wicked." In other words, man must be continually aware of the necessity to discipline his thoughts and actions. It is easy for man to be evil; it is hard for man to be good.

This is why man, who finds himself in a position of power, will tend to put himself first and his fellow man last. This is why power, in whatever form, is a potential danger. History has shown us wars, depressions, and hatreds that have pitted man against man, brother against brother, and parent against child, and at the root lies the lust for power.

Therefore, when the consumer starts applying the above truths of good and evil to economics, he can see that for his own personal well-being it is to his advantage to work at being wary so that he is able to consume wisely. Our liberties and our freedoms are to be cherished and can easily be lost because they are literally tied to the apron strings of a free-market economy.

Two Choices

Only through the human action of intellectual choice can the consumer hope to play his part in the salvation of the free-market economy.

There are only two choices: right or wrong-truth or error. Human intellect must separate the two and apply truth to capitalism because if it does not, error will prevail and the free-market economy will cease to exist. Unless man's mind is free, his body never can be.

For the wages of consumer ignorance is government control, the parent of bureaucracy and socialism; but the wages of consumer wisdom and understanding is freedom and liberty. The stakes are high.

Only through the human action of intellectual choice can the consumer hope to play his part in the salvation of the free-market economy from the very real threat of eventual domination by government.

# data[].attributes.attachment_link.description
It takes little effort to be a consumer. The simple act of buying a good or service is the only requirement for entering the club of consumerism, for in the free-market economy the consumer is a special person.

# data[].attributes.body
In a market, Consumers have a choice to buy or not buy a service based on the opportunity cost. On one hand, they could choose to spend time and money on a Spa, or instead stay home and get their spouse to massage them. In this instance, the opportunity cost would be money spent to go to a Spa plus the cost you save if you stay home.

http://www.econlib.org/library/Enc/OpportunityCost.html

# data[].attributes.attachment_link.readable_text
When economists refer to the "opportunity cost" of a resource, they mean the value of the next-highest-valued alternative use of that resource. If, for example, you spend time and money going to a movie, you cannot spend that time at home reading a book, and you cannot spend the money on something else. If your next-best alternative to seeing the movie is reading the book, then the opportunity cost of seeing the movie is the money spent plus the pleasure you forgo by not reading the book.

The word "opportunity" in "opportunity cost" is actually redundant. The cost of using something is already the value of the highest-valued alternative use. But as contract lawyers and airplane pilots know, redundancy can be a virtue. In this case, its virtue is to remind us that the cost of using a resource arises from the value of what it could be used for instead.

This simple concept has powerful implications. It implies, for example, that even when governments subsidize college , most students still pay more than half of the cost. Take a student who annually pays $4,000 in tuition at a state college. Assume that the government subsidy to the college amounts to $8,000 per student. It looks as if the cost is $12,000 and the student pays less than half. But looks can be deceiving. The true cost is $12,000 plus the income the student forgoes by attending school rather than working. If the student could have earned $20,000 per year, then the true cost of the year's schooling is $12,000 plus $20,000, for a total of $32,000. Of this $32,000 total, the student pays $24,000 ($4,000 in tuition plus $20,000 in forgone earnings). In other words, even with a hefty state subsidy, the student pays 75 percent of the whole cost. This explains why college students at state universities, even though they may grouse when the state government raises tuitions by, say, 10 percent, do not desert college in droves. A 10 percent increase in a $4,000 tuition is only $400, which is less than a 2 percent increase in the student's overall cost (see human capital).

What about the cost of room and board while attending school? This is not a true cost of attending school at all because whether or not the student attends school, the student still has expenses for room and board.

About the Author

David R. Henderson is the editor of this encyclopedia. He is a research fellow with Stanford University's Hoover Institution and an associate professor of economics at the Naval Postgraduate School in Monterey, California. He was formerly a senior economist with President Ronald Reagan's Council of Economic Advisers.

Further Reading

Alchian, Armen. "Cost." In Encyclopedia of the Social Sciences. New York: Macmillan. Vol. 3, pp. 404-415.

"When you start thinking about the value of your time, you realize that some activities that seem cheap are actually expensive." At the start of every class I teach, I give my students what I call "The Ten Pillars of Economic Wisdom." These pillars, I tell them, are the basis for a huge percent of economic analysis and if they master them, they will have accomplished a lot. None of the pillars, of course, is original with me. What is original is my choice of these ten, as well as the way ...

# data[].attributes.attachment_link.description
When economists refer to the "opportunity cost" of a resource, they mean the value of the next-highest-valued alternative use of that resource. If, for example, you spend time and money going to a movie, you cannot spend that time at home reading a book, and you cannot spend the money on something else.

# data[].attributes.body
Companies control the supply of a product to a consumer, the higher the price of a product the more likely they are to sell the product, as it is more profitable for them to do so. The reveres  is true if the product is less expensive, companies will want to sell the product less than they would a more expensive product and will supply less of it.

https://www.youtube.com/watch?v=KccMcf_xOQU

# data[].attributes.body
Businesses can take control over the production of a good and be able to sell at a low production cost and get a higher margin to take over the market. Making buyers only able to choose one seller for their needs.

https://www.youtube.com/watch?v=7UWgKZsKZOc

# data[].attributes.body
Buyers will have a higher demand for a product the less expensive it is. Companies should capitalize on this as it will allow them to have a larger market share if their price is better than their competition.

https://www.youtube.com/watch?v=uXlZIn6W7Ew

# data[].attributes.body
This picture shows the flow of money and services within a market and shows the roles of both parties. Businesses need consumers to buy things and businesses also employ consumers so that they have the means to consume.

https://www.slideshare.net/paneliyakumar/the-circularflow-diagram-efm

# data[].attributes.headline
The Roles of Buyers and Sellers in The Market

# data[].attributes.subject
The Roles of Buyers and Sellers in The Market

# data[].attributes.body
A look into roles of Consumers and Producers in the Market.