Answer to Question #235980 in Microeconomics for Maryam Lawal

Question

Compare the efficiency outcome of pure perfect competition with that of one impefrctly competitive market.conclude your analysis with a comment on why government of modern mixed economics invariably enact some of legislation to promote competition

Answer 1

Perfect competition is a theoretical market structure which is entirely controlled by market forces and hence minimal or no government intervention.Followings condition should be met for it to qualify to be pure and perfect competition

1.Where all firms deals with identical products.

2. Price of is determined by market forces.

3. Market share has no influence on prices.

4.Buyers have complete information of what is in market.

5.Capital and labour resources are both mobile

6.Free entry and exit into the market.

While imperfect competition  is a type competition that occurs when one of the conditions perfect are unmet. The sellers deal with different products there is always government intervention, restrictions in entry and exit market 1 and market forces does not affect price of products unlike in pure perfect competition market. Usually this type is common in market since to attain pure and perfect competition is less likely to occur practically. Monopolies , oligopolies are examples of imperfect competition.

perfect competition market produces quality products since there is no monopoly practiced unlike imperfect competition market.Hence government imposes legislation to regulate amount and type of business through licencing and taxing products sold to avoid illegal business and ensure only standard goods enter the market hence protecting it's citizens from harmful commodities. Through introduction of legislation fair competition is promoted and quality products are produced.