2 If the assumptions of perfect competition are not likely t

2. If the assumptions of perfect competition are not likely to be met in th real world, how can the model be of any use?

Solution

In the real world all the assumptions of the perfect competition are not met and it is a hypothetical extreme. But these competition makes us understand how the firm sets price and how much they want to produce. And also helps to understand the short run and long run decisions of the firms in the economy. The perfect competition is a good way to understand the world of markets. The perfect competition is used to predict the individual actors of the market.