A certain car manufacturer regards his business as highly co

A certain car manufacturer regards his business as highly competitive because he is keenly aware of his rivairy with the other car manufacturers. Like the other manufacturers, he undertakes vigorous advertising Campaigns seeking to convince potential buyers of the superior quality and better style of his automobiles and reacts very quickly to claims of superiority by rivals. Is this the meaning of perfect competition from an economics point of view Explain.

Solution

Yes this is a kind of perfect competition market. A perfectly competitve market is one in which the number of buyers and sellers are very large, all engaged in buying and selling a homogenous product without any artificial restriction and possesing perfect knowledge of market at a time. Here the car manufacturer is totaly aware of his compititors that is the most important feature of perfect competition and so he is trying to convince the buyers like other producers as every one is well aware of other firm. They all are selling identically same products.