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Perfect competition, a market structure with many buyers and sellers, homogeneous products, perfect information, and free entry/exit, is detailed. It explores assumptions like price-taking behavior and no entry barriers. The document examines implications for market efficiency, resource allocation, and consumer welfare. It discusses firms' production decisions for profit maximization and market equilibrium via supply and demand. Additionally, it addresses limitations and real-world applicability, considering product differentiation, imperfect information, and market power. This analysis is essential for understanding competitive market dynamics and their role in promoting economic efficiency and innovation. Perfect competition is a benchmark for evaluating other market structures and informing policies fostering competition and consumer welfare.
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