Perfect competition is a theoretical market structure. It is primarily used as a benchmark against which other market structures are compared. The industry that best reflects perfect competition in real life is the agricultural industry.
WHAT IS A PERFECT COMPETITION?
solution - It is that form of market where are very large numbers of buyers and sellers and same product sold with fixed price.
Now I explain that How in perfect comp. very large numbers of buyers and sellers, fixed price and same product sold.....
A perfect competition is the competition of product sold means If buyer wants to sell a product (ex. maggie), so he is not a single seller that he sells that product (maggie), there are many sellers that sells the same product... so a perfect competition found If the product sells to huge numbers of customers means If customers like product so much .. so every seller wants to sell the same product(ie ex. maggie).So thats why in perfect competition a huge numbers of sellers and a huge numbers of customers.
Now i take example..
Imagine a market in which every seller has maggie product.. so if customer wants to buy a maggie.. he has many option to buy a maggie to that seller. If one seller wants to attract the customer by lowering the price ie 10 to 8, so he will bring losses in the firm because if he purchase the product in Rs8 so how he sell the product in that rate. And if he wishes to high the price, so you know customers has many option that i above explained.. so same price prevails in the market or in
other words a firm is price taker and industry is price maker.
The fact that all the different businesses in this market system are price takers and are in competition with every other firm. They all want their products to be sold, but if one company raises their price, then they will sell nothing because consumers can buy from a firm selling the same product for a lower price. Therfore, it is perfect because the mindset is "everyone for themselves" and collusion is nearly impossible.
Perfect competition is a form of competition where the price is set by the demand and the supply of the good being sold that satisfies following criterion
Profit maximization occurs when the firm produces /sets their price at the intersection of the marginal cost curve and the horizontal MR DARP curve (marginal revenue, demand, average revenue, price)
In perfect competition, firms are unable to control the market price and always sell at their marginal costs.
perfect competion is a situation where the are many suppliers in the field
WHAT IS THE PROFIT MAXIMISATION?
If the company is public listed (trades in the stock market) their aim is shareholder wealth maximization whereas for a privately owned firm a profit maximization objective is appropriate.
it is operating cost
Both profit maximization and wealth maximization have the objective of increasing the net worth.
Shut
perfect competion is a situation where the are many suppliers in the field
Under what conditions might profit maximization not lead to stock price maximization?"
Not necessarily
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Profit maximization increase the graph of outputs.
Profit maximization can be both good or bad. Done correctly, profit maximization helps the company provide great products and services for customers.
sales maximization technique is generally used in scale industries where base of the expenses is largelly fixed and where variable costs are limited. on the other hand profit maximization technique are used by variety of industries. total output is higher in sales maximization as compared to profit maximization
discount rate
Shareholder wealth maximization is considered to be a more appropriate goal for the firm than profit maximization
WHAT IS THE PROFIT MAXIMISATION?
differentiate between value for money and profit maximization