Explain the implication in perfectly competition market about perfect knowledge about input used in production?

Dear student,

The implication of perfect knowledge about input used in production in a perfect competition market is that the buyers and sellers have perfect knowledge about the product and factor market respectively. 
All the sellers/ firms have a perfect knowledge about the factor market. They have equal access to inputs and technology used in production . There is no cost advantage to any firm, the cost structure of all the firms operating in perfect competitive market is same. Therefore, the price of product is also fixed or constant. No firm can charge any price higher or lower than that prevailing in the market and no buyer will be willing to pay any higher price as they too have a perfect knowledge about the product market.

Regards

  • 1
What are you looking for?