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Basic price theory only obtains under specific conditions like perfect competition, perfect information, fungibility of commodities, and zero friction for marke
by platz 7y ago
Basic price theory only obtains under specific conditions like perfect competition, perfect information, fungibility of commodities, and zero friction for market entry and exit.
- BurningFrog 7y agoThat's a common misconception. Yes, the theory only applies perfectly under those conditions, but real world experience is that the theories are quite robust even when all of those "perfect" preconditions are far from perfect. This is what makes the theories so practically useful in the first place! Studying how and when the theories break down when "perfection" diminishes is a very interesting part of Economics.