If perfect competition existed everywhere, along with frictionless exchange, perfect information, and constant returns to scale, ______.

Question

If perfect competition existed everywhere, along with frictionless exchange, perfect information, and constant returns to scale, ______.​

Quizplus · Accepted Answer

In a perfectly competitive market, consumers and resource suppliers would have direct transactions, eliminating the need for middlemen or intermediaries. This would be possible due to perfect information and frictionless exchange. Firms would still have access to the necessary information and resources to calculate marginal productivities and make production decisions. Entrepreneurs may not be as necessary in this type of economy, as information is readily available and there are no barriers to entry or exit for businesses. Barter would not be necessary as there would be an efficient monetary system in place. One large firm would not be ideal as there would still be benefits to competition and specialization among businesses.

If Perfect Competition Existed Everywhere, Along with Frictionless Exchange, Perfect