00:01
In order to be a perfectly competitive market, we have to come up with the four assumptions, right? what are these four assumptions? the first is that all the firms make identical products, non -differential identical products.
00:17
Why is this important? because if they don't create identical products, then people can have a preference over each firm.
00:25
They aren't perfectly competitive.
00:26
There is competition between them.
00:28
So, for example, suppose you want to treat the burger market as perfectly competitive.
00:33
Mcdonald's and burger king both have differences between them.
00:37
You might prefer burger king over mcdonald's.
00:39
They can't be perfectly competitive because there are differences between them.
00:44
So the second condition is that there are many buyers and sellers.
00:49
Why is this important? because if you don't have enough buyers and sellers, then people don't have to be price takers or price setters anymore...