Perfect competition!?
Answer:
Because the consumer(or the market) sets the price.
In perfect competition, all products in that market are identical and there are many, many producers. If one of those producers raised their price, everyone would just buy from the other billions of identical products. The producer also wouldn't lower their price because all their hundreds are being sold now.
Basically it's that any one producer is such a small chunk of the market that he/she has no influence on it.
That being said, I really can't think of a market that is in 100% perfect competition though. (Econ text used potato farmers, but I still think they could vary in growing methods.)
What?
Because in this type, business has to be the best (or at least close to the best) to survive in a high competition situation. Best service, best price for costomer, best quality. So, from the consumer point of view, who doesn't want that?
competition creates fair price and good service in the market place. This gives the consumer ability to choose the best price and best product or service.
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