Question.1153 - Describe your selected industry, and identify characteristics of the industry that are consistent with the definition of perfect competition and those that are not. Explain how the industry’s cost structure affects pricing decisions, entry, and exit. Specifically, how similar do you think a firm’s pricing and output decisions would be compared to a perfectly competitive industry?
Answer Below:
The industry that I selected is online shopping; according to the definition of perfect competition, it is a market structure where many firms produce identical products and a place where there is freedom and no barriers to entry and exit (Pettinger, 2019). For instance, eBay is a perfect example. In the scenario of online shopping, there are a huge number of buyers and sellers. There is a freedom for entry and exit. People actually do not need the physical level of entry or exit. Through online, many firms are selling their products at low prices (Perfect competition: 3 examples of the economic theory - 2023). The Internet has made it easy to compare the cost with other firms. For instance, I will consider an example of a specific book that I bought recently. I checked the price of the book, and many firms were selling it. Many distributors, such as Amazon and Barnes & Noble, sold it. I compared the costs of everything and bought it from the firm that was selling at the cheapest price. References Pettinger, T. (2019, November 20). Perfect competition. Economics Help. https://www.economicshelp.org/microessays/markets/perfect-competition/ Perfect competition: 3 examples of the economic theory - 2023. MasterClass. (n.d.). https://www.masterclass.com/articles/perfect-competition-examplesMore Articles From Economics
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