If the economy were truly made of industries that fit the textbook definition of perfect competition what do you expect would be a major disadvantage of this from the consumer's perspective?
What will be an ideal response?
One of the assumptions of perfect competition is that the products are all homogeneous. This would clearly reduce product variety across industries and eliminate consumer choice.
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When the price of tablet devices decreased in the 2010s, there was an increase in the demand for computing apps because tablet devices and computing apps are
A) substitute goods. B) capital goods. C) inferior goods. D) complementary goods.
Free exit implies that
A. a perfectly competitive firm can never earn a profit. B. firms will always earn below normal profit, as firms can exit the industry at any time they like. C. if an industry's existing firms make excessively high losses, firms are likely to exit the industry. D. the government regulates the number of firms it allows in an industry.