1) Easy Living microwaveable foods has had an increase in demand due to the large amount of buyers and sellers in the market. Because of the large numbers of buyers and sellers selling the same product. This market is perfectly competitive. 2) In assignment 1, it was also stated that the market structure competitive and that the equilibrium price was to be determined by setting QD equal to QS.
In a perfectly competitive market there are a large number of buyers and sellers. The products sold in this market are perfectly homogeneous. Examples of perfect competition are vegetable market, agricultural market, market for cereals etc.
The main characteristics of perfect competition are: a) Large number of buyers and sellers b) Homogeneous product c) No entry barriers d) No transaction cost e) Perfect information
A firm under perfect competition cannot affect the market price. They act as mere price takers. They take market price as given and sell any amount of quantity as per its capacity at that price. If a firm increases its price, consumers will then buy the product from another firm. Therefore a perfect competitive firm always sets its price equal to its MC.
Suppose in the short run the firm is earning a supernormal profit.
As a result, other firms will get attracted and will enter the industry. This will increase the industry output and market price will fall. This process will till the entire supernormal profit is exhausted and each firm ends up earning normal profits only. Therefore price will fall to the minimum point of the Average cost (AC) curve.

3) Recently it has been observed that the sellers of the microwavable food industry are trying to outperform each other. Therefore, they are trying to differentiate their product. As a result, variations in the product have been observed. By differentiating the products, the property