00:01
To understand the differences between imperfect and perfect competition, we should first try to understand these different, these characteristics that make up perfect competition.
00:09
And we start with one of them, which is going to be the characteristic of numerous buyers and sellers.
00:15
And what this does is it allows the market forces to take effect.
00:18
If we had very few buyers and sellers, then it wouldn't necessarily be the market forces.
00:22
It would just be these independent actors making these decisions.
00:25
Second characteristic of perfect competition is that there must be a standardized process.
00:30
And this exists so that consumers can essentially switch between products of different firms.
00:36
They see them almost as perfect substitutes.
00:38
There's a standardized product to work with.
00:41
Third characteristic of a perfectly competitive market is that there must be this freedom to enter and exit market.
00:48
So that is there's no restrictions to it.
00:51
It's entirely up to these firms if they would like to enter or exit certain markets.
00:56
And they'll typically do that based upon whatever prospective profits they think that...