What are causes and effects of the perfect market structures?

Answer 1

Perfect market structures, characterized by numerous buyers and sellers, homogeneous products, and free entry and exit, are primarily caused by the absence of barriers to competition and perfect information among consumers and producers. The effects of such a structure include optimal resource allocation, as prices reflect true supply and demand, leading to consumer welfare maximization. However, perfect markets are largely theoretical; in reality, market imperfections, such as monopolies or oligopolies, often lead to inefficiencies and unequal distribution of resources.