Which Of The Following Is Not A Characteristic Of Perfect Competition In The Short Run?
Which Of The Following Is Not A Characteristic Of Perfect Competition In The Short Run?
Answer:
In perfect competition, certain characteristics define how the market operates. Here are key characteristics with an explanation of which might not apply in the short run:
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Many Sellers and Buyers: There are numerous participants, so no single actor can influence market prices.
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Homogeneous Products: All firms sell identical products.
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Free Entry and Exit: In the long run, firms can freely enter or exit the market, but in the short run, this might not hold due to existing contracts and logistical barriers.
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Perfect Information: All buyers and sellers have full information about the product and prices.
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Price Takers: Individual firms do not have the power to set prices; they accept market prices as given.
In the short run, “Free Entry and Exit” is often not a characteristic of perfect competition. Businesses cannot immediately enter or exit the market due to various constraints like time, regulations, and capital.
Summary: In the short run, free entry and exit are typically not characteristics of perfect competition due to practical limitations. Other features like many sellers and price-taking behavior generally remain consistent.