For which market model are there a very large number of firms.?
Answer:
Perfectly competitive market model.
There are two market models that include a large number of firms. These are perfect competition and monopolistic competition.
Perfect competition assumes there are a large number of firms that produce homogeneous products, have no capital equipment, and can enter and exit the market costlessly.
Monopolistic competition also presumes a large number of firms, but has slightly looser assumptions about the market. It assumes that each firm produces somewhat differentiated products and has some pricing power, since no other firm produces a perfect substitute.
In the short run, firms can innovate and earn monopolistic profits. In the long run, these innovations are duplicated by other firms, and their excess profits are eliminated by the competition.
Monopolistic competition is closer to an accurate way of describing how the world works.
The answers post by the user, for information only, FunQA.com does not guarantee the right.
More Questions and Answers: