Explain five characteristics of a perfect market?
Question: Explain five characteristics of a perfect market?
A perfect market is characterized by five key features, including (1) a large number of buyers and sellers, (2) homogeneous products, (3) perfect information, (4) no barriers to entry or exit, and (5) perfect mobility of factors of production. A large number of buyers and sellers ensures that no single market participant can influence market prices. Homogeneous products mean that all products in the market are identical, ensuring that buyers and sellers have no preference for one product over another. Perfect information ensures that buyers and sellers have access to all relevant information needed to make informed decisions. No barriers to entry or exit ensure that new firms can easily enter or exit the market. Finally, perfect mobility of factors of production ensures that resources can move freely between different uses and sectors, ensuring efficient allocation of resources.
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