Title: What is Pure Competition? (with picture)
Headings: What is Pure Competition? (with picture)
What is Pure Competition? (with picture)
Malcolm Tatum
Malcolm Tatum
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Malcolm Tatum
Last Modified Date: February 25, 2021
Malcolm Tatum
Date: February 25, 2021
Businesses engaged in a pure competition market usually structure production so that they incur marginal costs at a level where they can earn the most profit. Also sometimes referred to as perfect competition, pure competition is a situation in which the market for a product is populated with so many consumers and producers that no one entity has the ability to influence the price of the product sufficiently to cause a fluctuation. Within this type of market setting, sellers are considered to be price takers, indicating that they are not in a position to set the price for their products outside a certain range, given the fact that so many other producers are active within the market. At the same time, consumers have little influence over the prices offered by the producers, since there is no singular group of consumers that dominates the demand. In reality, pure competition is more theory than actual fact. While there are rare situations in which a marketplace functions with pure competition for a short period of time, the situation normally shifts as various factors change the stalemate created by a multiplicity of sellers and buyers. This is often due to the somewhat stringent set of factors that must be present in order for the competition to be considered perfect or pure. There are several essential characteristics that define pure competition.