The following points highlight the top seven characteristics of a perfectly competitive market. The characteristics are: 1. Large Number of Buyers and Sellers 2. Homogeneous Product 3. Perfect Knowledge about the Market 4. Free Entry and Free Exit 5. Mobility of the Factors 6. Production Cost is the Only Cost 7. Horizontal Shape of the Firm's Average and Marginal Revenue [...]
In this article we will discuss about the long-run equilibrium of the firm and industry. Increase and Decrease in the Number of Firms in the Long Run: We know that the short-run equilibrium of a competitive firm, in the short run, the firm may earn pure profit, i.e., profit in excess of normal profit, as also the profit less than [...]
We shall now specifically discuss the 'short-run' equilibrium of a firm under perfect competition. We assume that the goal of the firm is to earn the maximum profit. Therefore, the point of profit maximisation is the firm's equilibrium point. By the profit of the firm, we shall mean the profit in excess of normal profit which may also be called [...]