Advantages and disadvantages of Perfect competition market structure?

Answer 1

Advantages of perfect competition

i) optimal allocation of resources

(ii) competition encourages efficiency

(iii) consumers charged a lower price

(iv) responsive to consumer wishes: Change in demand, leads extra supply

Disadvantages

(i) insufficient profits for investment

(ii) lack of product variety

(iii) lack of competition over product design and specification

(iv) unequal distribution of goods & income

(v) externalities e.g. Pollution