00:01
Hello! so in a perfectly competitive market, some essential assumptions here would be first that many buyers, so many buyers and sellers, so the assumption is that there are numerous buyers and sellers in the market, none of whom have the ability to influence the market price individually.
00:21
So each buyer and seller is a price taker, meaning that they must accept the market price as given, but in reality, most markets have varying degrees of concentration, with some firms having market power to influence prices.
00:39
And then secondly here, homogeneous products.
00:44
So the assumption is that all products or services are traded in the market are identical, or at least perceived as identical by buyers.
00:52
This assumption is not always realistic, as many markets have product differentiation, where firms offer goods or services with varying characteristics or brand identities.
01:03
And then perfect information.
01:08
Hello! so it's assumed that all buyers and sellers have complete and accurate information about prices, qualities, and production techniques in the market, but in reality, information is often imperfect, with varying degrees of asymmetry between buyers and sellers, leading to market inefficiencies...