Perfect competition

In perfect competition all the goods cost nothing to produce.

If they cost anything at all then that would be a barrier to entry!

Therefore as they cost nothing to produce all a firm has to do is produce (with no resources) an infinite number of goods and thus make an infinite profit.


...or is it?

1 comment:

  1. This degree of perfect competition exists only in theory. The closest we get to it in real life are trading floors , where there is perfect information and exact same quality of goods offfered. These goods such as some agricultural products traded cost money to produce and it is impossible to produce their infinite amount. Furthuremore, a huge increase in their quantity would lead to price dumpening