This achieves an optimal level of production
Posted: Thu Jan 23, 2025 4:25 am
Efficient use of the economic system's resources ., when there is neither an excess of goods nor a shortage of them - if demand changes, the supply volume will also shift in order to maintain price equilibrium.
Low cost, availability of goods and services for the consumer – perfect competition is characterized by a relatively low price level.
Incentive for production innovation – since an individual producer cannot influence the price, he can only increase profits by reducing his own costs.
The constant availability of goods on the market – perfect competition – helps to stabilize the volume of supply.
Advantages and Disadvantages of Perfect Competition
Source: Eduardo Soares / unsplash.com
Flaws :
In the long term, the economic profit of sellers guatemala telegram number database creases and tends to zero - as production volumes increase, the price has to be reduced, which reduces the share of profit.
The possibility of significant fluctuations in prices due to a sharp change in supply or demand, which may also be caused by non-economic factors.
Difficulties with the development of industries requiring large capital investments.
An irrational attitude towards natural resources, the emergence of environmental problems – each individual producer cares only about his own profit and therefore spends publicly available resources uneconomically.
Perfect competition as a market structure does not provide for the production of public goods.
Differentiation among buyers by income level remains, which determines the availability of goods and services.
Low cost, availability of goods and services for the consumer – perfect competition is characterized by a relatively low price level.
Incentive for production innovation – since an individual producer cannot influence the price, he can only increase profits by reducing his own costs.
The constant availability of goods on the market – perfect competition – helps to stabilize the volume of supply.
Advantages and Disadvantages of Perfect Competition
Source: Eduardo Soares / unsplash.com
Flaws :
In the long term, the economic profit of sellers guatemala telegram number database creases and tends to zero - as production volumes increase, the price has to be reduced, which reduces the share of profit.
The possibility of significant fluctuations in prices due to a sharp change in supply or demand, which may also be caused by non-economic factors.
Difficulties with the development of industries requiring large capital investments.
An irrational attitude towards natural resources, the emergence of environmental problems – each individual producer cares only about his own profit and therefore spends publicly available resources uneconomically.
Perfect competition as a market structure does not provide for the production of public goods.
Differentiation among buyers by income level remains, which determines the availability of goods and services.