Question

1. A firm in perfect competition competes by lowering its price to sell more. Explain clearly why you agree or disagree with this statement.

Answer 1

ANSWER:-

A firm in perfect competition competes by lowering its price to sell more. Explaining clearly agree or disagree with this statement:

1). Dis- agree.

• An ideal competition market is portrayed by countless firms selling homogenous product.ln such a market,a firm has no previlege to take choices with respect to its price.
• In an ideal competition market,a firm is a value taker.It can sell as enormous an amount it wishes.But it's conceivable just at the previlege market price.There are clear resons for it.

which are as per the following:

*A impeccable competition is described by opportunity of passage(entry) and exit

*The item created in the market is indistinguishable (homogenous)

• So different firms can enter the market effectively and produce an item that is crucial from each other company's product.This makes inconceivable for a firm to set the costs of its own item and increment benefits by bringing down price.