Final answer:
Market quality is influenced by information symmetry and ease of market entry and exit. Accurate information is crucial for proper demand elasticity, while low barriers to entry ensure competitive dynamics and market efficiency.
Step-by-step explanation:
Two important characteristics of market quality are the level of information symmetry and the ease of market entry and exit. For a market to function effectively, buyers and sellers need to have access to accurate information regarding the quality of products, which directly impacts the elasticity of demand. In addition, both perfect and monopolistic competition highlight that market quality includes the ability of firms to enter and exit the market freely, indicating low barriers to entry and minimal restrictions on new entrants.
In perfect competition, this is achieved through many sellers offering homogeneous products and a high degree of transparency where both sellers and buyers are well informed about the products. In such markets, any profits made by firms in the short-run will lead to new entrants in the long-run, which typically drives profits down to normal levels as the market reaches equilibrium.
However, when information is highly imperfect, the essence of market quality deteriorates making it difficult for markets to sustain. This is because consumers' and producers' uncertainty about product qualities may lead to suboptimal decision-making and market inefficiencies. Thus, market quality is deeply tied to the flow of information and the mechanisms enabling the freedom of movement within the market.