Essay on An Evaluation Of A Competition Environment
An important lesson learnt is that firms operating in perfect competition are unable to set the price and are usually prices takers. The price is determined by the intersection of the demand curve and the supply curve. The implications of the assertion are that each individual firm responds to the demand-supply paradigm. An evaluation of the abovementioned ideology suggests that for the perfect competition to hold true, then all the players in the market are of the same size and have access to similar resources.
In general, the market demand curve for a market operative in perfect competition is a downward sloping curve for ordinary goods. The curve slopes down to reflect that the cost of ordinary goods is inversely related to the demand function. Simply, the price of a good or service reflects the demand in the market as the price of the good…