https://padlet.com/rachna_shukla15/luvt4fhpzyqh Made with love en-us 2018-01-18 04:00:57 UTC 2023-09-19 04:29:55 UTC hello@padlet.com rachna_shukla15 https://padlet.com/rachna_shukla15/luvt4fhpzyqh/wish/2709474012 ●Critically evaluate the merits and limitations of the perfectly competitive market structure ]]> 2023-09-18 19:53:01 UTC https://padlet.com/rachna_shukla15/luvt4fhpzyqh/wish/2709474012 https://padlet.com/rachna_shukla15/luvt4fhpzyqh/wish/2710069966 As one of the merits, knowledge spreads out evenly between all existing firms. Monopoly is not a problem, due to no entry barriers. Allocation of resource is at the most efficient point. Higher competition leads to lower prices for consumers, competition also leads to better entrepreneurial activity and push firms to move in direction of higher efficiency.

On other hand, there’re limitations, as for example, even if in the short run company may produce supernormal profit, in long run due to the no entry barriers, company will make normal profit. As all products are homogeneous, there are luck of innovation and investment, because there is no excess funds, that can affect efficiency, consumer may have less range of production and limited choice. Market share of each company is decreased, firms can’t control the price.]]> 2023-09-19 04:24:59 UTC https://padlet.com/rachna_shukla15/luvt4fhpzyqh/wish/2710069966 https://padlet.com/rachna_shukla15/luvt4fhpzyqh/wish/2710075539 The merits of a perfectly competitive market are:
- low barriers to entry, meaning they it’s easier for firms to enter the market and increase competition. This can then lead to lower prices 
- in a perfectly competitive market a firm may have lower total profit and profit margins than in a monopoly
- there is grater entrepreneurial activity thanks to the competition in the market and there is desire to innovate and invest in order to sustain and improve competition
- competition will move firms towards productive efficiency and x efficiency

The disadvantages of a perfectly competitive market are:
- in a perfectly competitive market is unrealistic for the real world
- the consumer doesn’t have loyalty towards a firm in particular, homogeneous products
- lack of innovation and incentive as supernormal profit is needed
- the consumer has limited choice over the products 

Daisy

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