![]() However, perfect competition is more of a theoretical competitive framework because markets will naturally deviate to varying degrees (in order to capture profitable returns). While this is an idealistic representation of markets, it is useful as a frame of reference to identify departures from ideal competitive circumstances. ![]() Note that the overall returns derived, costs incurred, quantity produced, and price point all align perfectly to generate an equitable market position. ![]() Perfect Competition Economics: This is a graphical illustration of economics within the context of a perfectly competitive market (theoretically). This allows for revenues, costs, price, and quantity to achieve a balance where the consumer is provided with the optimal amount of a good at the most equitable price. In a perfectly competitive market, the antithesis of a monopoly, demand is completely elastic and the production quantity and price point align perfectly with marginal costs and actual costs. To understand why trends towards consolidation are so dangerous it is useful to frame why competition is of such critical value to equitable markets, particular from a consumer perspective. price discrimination: The practice of selling identical goods or services at different prices from the same provider.A monopoly with total control over the supply can charge any price that the consumer is willing to pay, and therefore can generate excessive margins while doing very little to improve their product/service or relevant processes.The accumulation of power and leverage on behalf of the suppliers largely revolves around the fact that monopolies can ultimately control supply in its entirety for a specified product or service.As such, the perfect competition model is most useful in identifying and measuring deviations or departures from the competitive ideal. However, markets will naturally deviate to varying degrees (in order to capture profitable returns). Perfect competition is a theoretical competitive framework.In a perfectly competitive market, the antithesis of a monopoly, demand is completely elastic and the production quantity and price point align perfectly with marginal costs and actual costs.
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