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Which of the following is not a feature of pure competition?
- a)Presence of Government restrictions
- b)Homogeneous products
- c)Large number of buyers and sellers
- d)Free entry and exit of firms
Correct answer is option 'A'. Can you explain this answer?
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Which of the following is not a feature of pure competition?a)Presence...
Understanding Pure Competition
Pure competition is characterized by several key features that create a market environment where no single buyer or seller can influence the market price.
Key Features of Pure Competition:
- Homogeneous Products: All firms produce identical or very similar products, making it easy for consumers to switch between suppliers without loss of satisfaction.
- Large Number of Buyers and Sellers: The market consists of many buyers and sellers, ensuring that no single entity can control the market dynamics.
- Free Entry and Exit of Firms: Firms can enter or leave the market without significant barriers, promoting competition and innovation.
Why Presence of Government Restrictions is Not a Feature:
- Government Restrictions: The option "Presence of Government restrictions" is not a feature of pure competition. In a purely competitive market, government interventions are minimal.
- Market Freedom: Pure competition thrives on the principle of free market forces where prices are determined by supply and demand. Government restrictions can create barriers to entry or limit competition, which contradicts the essence of pure competition.
- Market Efficiency: The absence of government restrictions allows for efficient allocation of resources, leading to optimal production levels and prices that reflect true consumer preferences.
In conclusion, the correct answer is option 'A' because the presence of government restrictions disrupts the fundamental principles of pure competition, where market dynamics should ideally operate without interference.
Pure competition is characterized by several key features that create a market environment where no single buyer or seller can influence the market price.
Key Features of Pure Competition:
- Homogeneous Products: All firms produce identical or very similar products, making it easy for consumers to switch between suppliers without loss of satisfaction.
- Large Number of Buyers and Sellers: The market consists of many buyers and sellers, ensuring that no single entity can control the market dynamics.
- Free Entry and Exit of Firms: Firms can enter or leave the market without significant barriers, promoting competition and innovation.
Why Presence of Government Restrictions is Not a Feature:
- Government Restrictions: The option "Presence of Government restrictions" is not a feature of pure competition. In a purely competitive market, government interventions are minimal.
- Market Freedom: Pure competition thrives on the principle of free market forces where prices are determined by supply and demand. Government restrictions can create barriers to entry or limit competition, which contradicts the essence of pure competition.
- Market Efficiency: The absence of government restrictions allows for efficient allocation of resources, leading to optimal production levels and prices that reflect true consumer preferences.
In conclusion, the correct answer is option 'A' because the presence of government restrictions disrupts the fundamental principles of pure competition, where market dynamics should ideally operate without interference.
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Which of the following is not a feature of pure competition?a)Presence of Government restrictionsb)Homogeneous productsc)Large number of buyers and sellersd)Free entry and exit of firmsCorrect answer is option 'A'. Can you explain this answer?
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