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Paper Topic:

Perfect and Imperfect Competition

Perfect and Imperfect Competition

There is only one gas station in my neighborhood , the Exxon Service Station . The price of Exxon Service Station gas is 2 .25 per gallon Even though the price is too high for some people , they still buy the products of Exxon service station . Some stations are so far from our neighborhood . That is why it is still efficient if they buy gasoline products from the service station that have relatively lower price . The quality of the gasoline that Exxon sell does not differ that much with the

quality of gasoline sellers outside my neighborhood Fig . 1 : Exxon Efficiency

The figure is an approximate of the cost and pricing of Exxon service station . Exxon will approximately cost 1 .5 per gallon of gasoline . On the other hand , Exxon 's price increases as the quantity decreases

Fig . 2 : Efficiency of Perfect Competition - Gasoline Market

The graph shows a perfect competition within gasoline market . Some assumptions are needed to be satisfied in to say that a market is in the state of perfect competition . First is that consumers are indistinguishable to consumers . Second is that there is a large number of producers and consumers . Third , consumers and producers have a perfect knowledge of the price and quality of the product . Lastly , there is a free flow of resources in the market . If of the assumptions hold , then the market is in the imperfect form . Imperfect competition will form if one or more seller is at the...

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