Pure Competition - Therefore, even if a firm doubles or...

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Pure Competition: The market is said to be pure when i) There is a large number of buyers and sellers; ii) Goods produced and sold are homogeneous, and iii) There is Free Entry or Exit for any producer or seller. The three conditions together ensure that an individual firm can have no control over market conditions of price and quantity supplied. The first condition ensures there are several competitive firms in the market. Each firm has a small and insignificant share in the market supply.
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Unformatted text preview: Therefore, even if a firm doubles or completely withdraws its share from the market its actions will not affect market conditions. Further, each firm produces homogeneous products. The goods produced are physically and chemically identical in their qualities. This further takes away the influencing capacity of firms. Finally, there is complete freedom to enter or exit the market. So long as a firm finds existing market conditions beneficial, it will continue to produce and sell....
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