Balance

Examples of the assumptions of the perfect competition:
1. Many consumers and firms in the market:
Ex: In the chocolate market there arelots of brands which sell chocolate (Nestlé, Lindt, Cadbury…), and lots of people that buy it.
Contra-ex: In the Luxurious cars market there are fewfirms which provides this type of cars, and also, few people that buy them.

2. Purchasing and selling decisions are independent:
Ex: Inthe clothes market the price of a brand doesn’t affect the price of others in an absolute form.
Contra-ex: On the other hand, at the petrol market,the price that a company sets affects the price that other companies would sell the petrol.

3. The product is homogeneous:
Ex: In the milkmarket, the products from all firms are all the same.
Contra-ex: The mobile phone market pretends to be as heterogeneous as it could.

4.All agents have perfect information about the characteristics of the market:
Ex: In the Stock Exchange market all investors have all theinformation from the companies they can invest.
Contra-ex: In the housing market, the price of a house can vary a lot depending on the place, the realstate…

5. There exists free entry and exit:
Ex: The lettuce market, everyone with a piece of land that can grow lettuce, can sell it.Contra-ex: In the boat market, to start the business you have to invest a large amount of money. To quit this business you have to face high fixed costs.