General Definition of Perfect Competition Market

General Definition of Perfect Competition Market
This discussion will explain the definition of perfect competition, the characteristics of perfect competition and examples of perfect competition and the advantages and disadvantages of perfect competition. In general, the definition of a perfectly competitive market is a market where there is strength from the demand for supply that can move freely. Or it can also be interpreted that the perfect competition market is a market with a large number of sellers and buyers, so that no single seller or buyer can influence the price. Perfect competition is a market where sellers and buyers cannot influence prices, so prices in the market are really the result of agreement and interaction between supply and demand. According references from Zambrut International Journal, the demand formed reflects consumer desires, while supply reflects the desires of producers. In a perfectly competitive market, the seller and the buyer have absolutely no ability to influence market prices because there is already an inner bond between the seller and the buyer knowing the structure and information that is in the perfect competition market.
Examples of Perfect Competition Markets; The staple food market is rice that is linked between farmers as producers and traders as buyers. In the rice market there are a lot of (farmers) supply, each of them sells rice in a relatively small amount with a very simple form, so that each farmer cannot influence the price in the market that has been formed. If the farmer sells below the market price, he will lose, and vice versa if he sells above the market price, he will be left by the buyer.
The Characteristics of the Perfect Competition Market; Perfect competition markets have special characteristics, including the following: There are many buyers and sellers, meaning that each party, both buyers and sellers, cannot influence market prices. The number of traded goods is homogeneous, meaning that consumers assume that the goods traded have the same quality. Complete market information, meaning that the buyer and seller know each other about the quality, price, place and time of the goods being traded. Price is determined by the mechanism of demand and supply, meaning that the buyer is free to make the decision to buy or not the goods, so the seller also has the freedom to sell charcoal and services. Free from government interference, meaning that the government does not interfere in determining prices in the market. The emergence of its own strengths in the market, meaning that there are no outside forces, both the government and other parties that can influence the decisions taken by sellers and buyers.
Advantages of Perfect Competition Market. The following are the advantages of a perfectly competitive market: In a perfect competition market, there is no visible competition between the buyers. It is not possible for a seller to enter a price competition with the intention of seizing the market, because the market price is something that must be accepted by each producer. The goods offered by the seller will sell in any quantity without decreasing the price. It is impossible to move the shape of the goods to make a market because of the homogeneity of the goods. Information about the market has been known by business rivals and efforts to compete with other companies also do not produce anything, because the number of rivals is very unlimited. Consumers do not need to tense about bargaining the price of goods because the price can not be influenced by anyone.
Weaknesses of perfectly competitive markets; In addition to having some merits, the perfect competition market has the following weaknesses: Does not encourage innovation. In a perfectly competitive market, technology can be easily copied by other companies. Limiting consumer choices, because the goods produced by companies are one hundred percent the same, thus making consumers have limited choices to determine the goods to be consumed. Unequal / unequal distribution of income. Thus a Simple Article on the discussion of the Perfect Understanding Competition Market and its Characteristics. may be useful for all of us. That is all and thank you.