Perfect competition
What Perfect competition means in Economics A-Level, as defined for AQA.
Definitions of Perfect competition
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Reference: AQA
A market with many buyers and sellers, homogeneous labour and perfect information, in which wage rates and employment levels are determined solely by the interaction of market demand and market supply of labour.
The theoretical extreme of the spectrum featuring infinitely many small buyers and sellers, homogeneous products, perfect information, and zero barriers to entry.
A market in which individual firms are price takers, meaning the market price equals their marginal revenue.
Topics that use Perfect competition
- Market structures (AQA A-Level)
- The determinants of the supply of goods and services (AQA A-Level)
- The determination of relative wage rates and levels of employment in perfectly competitive labour markets (AQA A-Level)
Related terms
- Average variable cost
- Barriers to entry
- Ceteris paribus
- Imperfect information
- Labour immobility
- Labour markets
- Marginal cost curve
- Marginal revenue product
Using Perfect competition in the exam
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