Advertisements
Advertisements
Question
Explain the following feature of perfect competition:
Homogeneous products
Advertisements
Solution
Homogeneous products refer to those products which are identical in quality, shape, size, colour, design, packing, etc. They are identical in the eyes of their buyers. Thus, buyers have no bias towards any particular seller. They find no reason to prefer the product of one seller to the product of another seller. No seller can increase the price of his product because the goods they sell are the same. If he does so, he will lose all his customers. Nor will anyone sell the product at a price lower than the market price. Why should anyone sell at a lower price when he can sell at a higher price? It is because of this feature that firms are able to earn only normal profits.
APPEARS IN
RELATED QUESTIONS
What is meant by Perfect competition?
Homogeneous product is a feature of this market.
- Monopoly
- Monopolistic competition
- Perfect competition
- Oligopoly
With reference to Perfect competition form of market, choose the odd one out.
______ is relevant to perfect competition.
In which market form, marginal revenue is equal to price?
______ is essential for a market to be called as perfect competition.
In a perfectly competitive market, an individual firm is called a price taker because ______.
Which feature ensures that buyers are indifferent between different sellers in perfect competition?
Which combination of conditions defines pure competition?
Which statement best distinguishes perfect competition from pure competition?
