State whether the following statement is True or False with reason:
Perfect competition means pure competition.
Answer with reasons whether you agree or disagree with the following statement:
Perfect competition means monopolistic competition.
False, perfect competition does not mean pure competition.
The following table shows the difference between the two kinds of market forms.
|Perfect Competition||Pure Competition|
|Factors of production are perfectly mobile.||Factors of production are immobile and cannot move from one industry to another.|
|Buyers and sellers have perfect knowledge about the prevailing market conditions.||Buyers and sellers have imperfect knowledge about the prevailing market conditions.|
|The characteristics of perfect competition are quite stringent, hence the existence of this market structure is a myth.||The characteristics of this market structure are comparatively liberal, hence, can be found in the real world.|