4.1.5.3 Perfect competition
Features of perfect competition:
• Many small buyers and sellers – lots of competition
• No barriers to entry or exit – easy to enter/ exit market
• Homogeneous products – same products
• Perfect information -
Perfectly elastic demand means consumers are extremely responsive to price changes! If a firm puts
their price up by a small amount, their consumers will stop buying from them completely because
they’re so sensitive to price changes. They’ll immediately switch to another seller in the market.
Short run:
Features of perfect competition:
• Many small buyers and sellers – lots of competition
• No barriers to entry or exit – easy to enter/ exit market
• Homogeneous products – same products
• Perfect information -
Perfectly elastic demand means consumers are extremely responsive to price changes! If a firm puts
their price up by a small amount, their consumers will stop buying from them completely because
they’re so sensitive to price changes. They’ll immediately switch to another seller in the market.
Short run:
