Answer to Question #159174 in Macroeconomics for John

Question

The entry or exit of a single perfectly competitive firm has practically no effect on the market?

Answer 1

The entry or exit of a single perfectly competitive firm has practically no effect on the market because in perfect competitive market there is free entry and exit to the market. The market is composed of large numbers of buyers and sellers dealing with homogeneous products such that when a single firm exits or enters the market , there will be no effect in the market.