Perfectly competitive markets help keep prices fair for everyone. Here’s how they do it:
Many Buyers and Sellers: There are lots of buyers and sellers in the market. This means that no one person or company can control the prices, which leads to competition.
Similar Products: The products being sold are almost the same. Because of this, if one seller raises their price, customers can easily switch to another seller. This pressure keeps prices reasonable.
Price Takers: Companies have to accept the price set by the market instead of setting their own. For example, if apples cost $1 per kilogram, all sellers must sell at that price, or they won’t sell anything.
Easy to Join the Market: New businesses can start up easily, which means if prices go up, more sellers can enter the market. This increase in supply helps to bring prices back down over time.
Together, these features help create a fair pricing system that benefits consumers.
Perfectly competitive markets help keep prices fair for everyone. Here’s how they do it:
Many Buyers and Sellers: There are lots of buyers and sellers in the market. This means that no one person or company can control the prices, which leads to competition.
Similar Products: The products being sold are almost the same. Because of this, if one seller raises their price, customers can easily switch to another seller. This pressure keeps prices reasonable.
Price Takers: Companies have to accept the price set by the market instead of setting their own. For example, if apples cost $1 per kilogram, all sellers must sell at that price, or they won’t sell anything.
Easy to Join the Market: New businesses can start up easily, which means if prices go up, more sellers can enter the market. This increase in supply helps to bring prices back down over time.
Together, these features help create a fair pricing system that benefits consumers.