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 mart place organize because it supports the actual ideology of a giving market frugality where, for example there is no government activity intervention. The entrepreneur in blameless competition whole turnout and caboodle independent of other entrepreneurs and all(prenominal) individual buyer or seller does not bias the market, there are accurate 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 libertines. Both the consumers and producers down a better knowledge of market see to its. The demand wind 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 just about stable market form, and hence the most desirable. It leads to the go mingy to possible ef ficiency for the firm. It whole caboodle best for both the buyers and sellers and works in accordance to each persons needs and abilities. It is a source 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 close to modern industry because life in the economic origination can neer be perfect.

There can neer be a market fuddled to having perfect conditions for competition. It is accepted that many markets, such as the ones for raw materials come close to being in perfect competition, they can never sincer! ely achieve perfect competition. This is due to many factors but oddly the dissatisfaction of the characteristics of a perfect competition market as rarify 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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