What is profit maximization in perfect competion?

Answer 1

Perfect competition is a theoretical market structure. It is primarily used as a benchmark against which other market structures are compared. The industry that best reflects perfect competition in real life is the agricultural industry.
WHAT IS A PERFECT COMPETITION?

solution - It is that form of market where are very large numbers of buyers and sellers and same product sold with fixed price.

Now I explain that How in perfect comp. very large numbers of buyers and sellers, fixed price and same product sold.....

A perfect competition is the competition of product sold means If buyer wants to sell a product (ex. maggie), so he is not a single seller that he sells that product (maggie), there are many sellers that sells the same product... so a perfect competition found If the product sells to huge numbers of customers means If customers like product so much .. so every seller wants to sell the same product(ie ex. maggie).So thats why in perfect competition a huge numbers of sellers and a huge numbers of customers.

Now i take example..

Imagine a market in which every seller has maggie product.. so if customer wants to buy a maggie.. he has many option to buy a maggie to that seller. If one seller wants to attract the customer by lowering the price ie 10 to 8, so he will bring losses in the firm because if he purchase the product in Rs8 so how he sell the product in that rate. And if he wishes to high the price, so you know customers has many option that i above explained.. so same price prevails in the market or in

other words a firm is price taker and industry is price maker.

Answer 2

The fact that all the different businesses in this market system are price takers and are in competition with every other firm. They all want their products to be sold, but if one company raises their price, then they will sell nothing because consumers can buy from a firm selling the same product for a lower price. Therfore, it is perfect because the mindset is "everyone for themselves" and collusion is nearly impossible.

Answer 3

Perfect competition is a form of competition where the price is set by the demand and the supply of the good being sold that satisfies following criterion

• Many buyers and sellers
• Perfect knowledge of the market for both buyers and sellers (i.e. know how much demand there are, how much supply there are...)
• No barrier of entry: People can enter and leave the market whenever they wish
• Homogeneous good (each good is NOT distinguishable from the others)

Answer 4

Profit maximization occurs when the firm produces /sets their price at the intersection of the marginal cost curve and the horizontal MR DARP curve (marginal revenue, demand, average revenue, price)

Answer 5

In perfect competition, firms are unable to control the market price and always sell at their marginal costs.