Perfect competition and the consumer Essay Example | Topics and Well Written Essays - 1000 words

Perfect competition and the consumer - Essay Example Thus the firms within this market become price takers. Freedom of entry: The market has a number of firms hence the entry into this market is absolutely open to all as the existing firms are unable to stop the new entrants. This however affects the market in the long run as the time taken to start a new business is time consuming. Perfect Knowledge: In these types of markets the producers have complete knowledge of the market. The producers are aware of all the aspects of the market like the prices, quality, and availability of product. The different competitions in the market affect the consumers in a number of ways. Every market has a structure very different from the other and the affects on the consumer are varied. In the assumptions that are mentioned above, it is clear how the market functions. The effects of perfect competition markets are many. Consumers of this market have a variety of choice since the product that is produced within these markets is homogenous i.e. identical products (Corchon, 2001). This gives the customers a better variety of choice and the customers do not need to choose between brands. Also since the companies are price takers, the chances of the companies charging extra for the product is completely mitigated and consumers can be sure of the pricing of the products. Also in these markets the consumers are fully aware of the prices, quality and availability of goods and cannot be cheated. This gives the consumers an upper hand as they are completely aware of the market conditions and the products within the market. In the case of monopoly, there is only one firm in the market. This makes the firms price makers. In this type of market the consumers do not have a wide variety to choose from hence they require accepting whatever is available in the market. This type of market structure is not very beneficial to consumers since the choice of products is not available and the