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The Competitive Situation - Identify and explain the meaning and features of a perfect and imperfect competition.
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Business The Competitive Situation 1. Identify and explain the meaning and features of a perfect and imperfect competition. The model of perfect competition assumes businesses produce products which are exactly the same. Consumers have "perfect knowledge" of the market. They are aware of what is being offered by all businesses and are aware of the prices that are charged. There are no barriers to prevent firms from setting up and and there is a large number of firms in competition with one another. There is also no intervention by the government. Each individual firm has no influence over the price which it charges for its products. If a firm were to charge a higher price than others then no consumers would buy its products, since every product is exactly the same and they would know exactly where to go and buy an alternative. A firm that charged a price below others would be forced...
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