Question

What necessary condition for the presence of competition in a market?

Answer 1

Answer: See explanation below.

Explanation: The following are necessary conditions for competition in a market.

1. There are many firms that produce identical products or services. This will foster competition among the firms.

2. There and many buyers available to buy a particular product or service, and there are also many sellers who are ready to sell a product or service.

3. Free entry and free exit of the market. This means that there a little or no restrictions for entering or leaving a market. Firms can come and go as they please.

4. Presence of relevant information to buyers and sellers in order that they might make rational buying and selling decisions, especially information about price.

5. There is little or no government regulation.

Answer 2

There are several conditions which are required for there to be a perfect competition in a market or economy.

Let me highlight those, there should be many firms in the market which have identical product offerings with not so variable prices. Secondly, the size of the firms on the market should not be big in terms of its sales. Thirdly, the market forces determine the demand and supply in the market. Fourthly, firms should be able to easily enter and exit the market as per their will. Lastly, there are a number of sellers and buyers in the market for a particular product.

Hope this helps you.

Good Luck.