Advantages & disadvantages
Advantages of perfect competition
I) optimal allocation of resources
(ii) competition encourages efficiency
(iii) consumers charged a lower price
(iv) responsive to consumer wishes: Change in demand, leads extra supply
Disadvantages
(I) insufficient profits for investment
(ii) lack of product variety
(iii) lack of competition over product design and specification
(iv) unequal distribution of goods & income
(v) externalities e.g. Pollution
Advantages of perfect competition
I) optimal allocation of resources
(ii) competition encourages efficiency
(iii) consumers charged a lower price
(iv) responsive to consumer wishes: Change in demand, leads extra supply
Disadvantages
(I) insufficient profits for investment
(ii) lack of product variety
(iii) lack of competition over product design and specification
(iv) unequal distribution of goods & income
(v) externalities e.g. Pollution
