Answer to Question #151661 in Microeconomics for zik

Question

c) Walter is a car manufacturer and he regards his business as highly competitive because he is keenly aware of the rivalry of other car manufacturers in the market. As expected of any business the company takes part in vigorous advertising campaigns seeking to convince potential buyers of the superior quality and better style of the Walter automobiles and the company reacts very quickly to claims of superiority by rivals. Is this the meaning of perfect competition from the economist’s point of view?

Answer 1

This is not the meaning of perfect competition from the economist’s point of view, because advertising and product differentiation are characteristics of monopolistically competitive industry.