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A perfectly competitive market is characterized by many small firms, homogeneous products, perfect information, no barriers to entry or exit, and price-taking behavior. In the short run, firms can earn abnormal profits or losses, but in the long run competition drives prices down until only normal profits are made as entry by new firms shifts industry supply. The model assumes markets achieve maximum efficiency and welfare, though few real markets exhibit all characteristics of perfect competition. It provi
- Author
- hussnain tarar
- Language
- EN