Explain what is meant by saying that the Model of Perfect Competition is: A description of...

Explain what is meant by saying that the Model of Perfect Competition is:

A description of reality, and:
A standard of comparison by which we judge industries in the economy.

Expert Solution

A) A description of reality

A model of perfect competition is a description of reality because it tells about the actual market potential and position of the business.This is a true measure for calculating actual changes happens in the business.it is near to reality.

B) a model of perfect competition is a standard of comparison by which we industries in the Economy

A model of perfect competition is a standard of comparison Because it's measure the actual position of the market where too many firm's are doing business hence it's takes actual comparative values for comparison.

Rahul Sunny answered 2 years ago

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