Introduction to Basics of Economics
Perfect competition is a market structure in which a large number of small firms compete against each other. In a perfectly competitive market, no single firm has the power to influence the price of the product or service being sold. This is because there are so many buyers and sellers that no one has the ability to significantly affect the market price.
This means that new firms can easily enter the market if they believe they can make a profit, and unprofitable firms can easily exit the market. Because of this, in the long run, firms in a perfectly competitive market earn zero economic profit.
However, it is important to note that perfectly competitive markets are rare in the real world. Most markets have at least some barriers to entry or exit, and many markets have only a few dominant firms that have the power to influence prices.
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