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NATIONAL ASSOCIATION OF SECURITIES DEALERS: A stock market in which corporate stocks are exchanged by dealers across the country using a computerized system of stock price quotes. This is often referred to as the "over-the-counter" stock market, because, unlike the New York Stock Exchange, the American Stock Exchange, and others, the dealers don't conduct their business at a single location. They match up their buy and sell orders through a computer network rather than through the face-to-face contact. Transactions conducted by the NASD give rise to one of the more commonly publicized stock market price indicators, the NASDAQ (which stands for National Association of Securities Dealers Automated Quotation). The widely used NASDAQ composite index is based on the prices of 5,000 of these over-the-counter stocks.
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                           PERFECT COMPETITION, REALISM: Perfect competition is an idealized market structure that does NOT exist in the real world. While some real world industries might come relatively close to one or two of the four key characteristics of perfect competition, none matches all four sufficiently that they can be declared PERFECTLY competitively. Some industries come close on the large number of small firms and the identical product characteristics. A few industries have relatively good, although not perfect, information about prices and technology. However, almost all industries fall far short of the perfect mobility characteristics. Perfect competition is NOT intended as a description of real world industries. It is designed as a idealized benchmark that can be used to evaluate real world industries. The extremely restrictive characteristics that make up perfect competition (perfect "this" and perfect "that") create a market structure that efficiently allocated resources. If the real world economy was actually populated by nothing but perfect competition, then resources would be efficiently allocated. It would not be possible to reallocate resources in any way that would generate any greater satisfaction of wants and needs.Real world market structures (especially oligopoly and monopolistic competition), all of which fall short of the idealized characteristics of perfect competition, can then be compared against the perfectly competitive benchmark. The fun part of economic analysis is then to see how and where particular industries fall short and the degree to which each of these specific characteristics contribute to the lack of efficiency. Consider Phil the zucchini grower. As one of gadzillions of zucchini growers, each producing identical zucchinis, Phil would seem to be operating in a perfectly competitive industry. But is he... really? - First, consider the large number of growers characteristic. While there are gadzillions of zucchini growers, Phil does not compete with every zucchini grower in the nation. Because zucchinis are perishable and costly to transport, Phil's market is likely confined to his hometown of Shady Valley. In this case, he might be one of only a few hundred zucchini producers. Being one of a few hundred provides significantly more market control that being one of gadzillions.
- Second, consider the identical product characteristic. If Phil provides "service with a smile" and offers only the plumpest, juiciest, ripest zucchinis for sale, then buyers might prefer to buy Phil's zucchinis over those of other zucchini growers. In the view of the buyers, Phil's zucchinis are not identical to the other zucchinis in the Shady Valley zucchini market.
- Third, consider the perfect resource mobility characteristic. While Phil can easily exit the Shady Valley zucchini market by not planting any more zucchinis, there are barriers to entering the market. In particular, a zucchini grower needs a chunk of land upon which to grow zucchinis. While most homeowners in Shady Valley could easily clear a plot by the back fence, landless apartment dwellers or the homeless lack this opportunity. The cost of entering the zucchini market might be low, but it is not zero.
- Fourth, consider the perfect knowledge characteristic. A lot of folks are completely clueless when it comes to growing zucchinis. Are the seeds planted by a full moon in March? How far apart are the seeds planted? Do zucchinis grow on trees? Is it necessary to irrigate? How much and what kind of fertilizer is added? Are zucchinis harvested (or picked) when they are green, or yellow, or some other color? Moreover, what is the going price of zucchinis? Is it really $2.50? So many questions, so few answers. And certainly not perfect knowledge.
 Recommended Citation:PERFECT COMPETITION, REALISM, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2023. [Accessed: March 24, 2023]. Check Out These Related Terms... | | | | | Or For A Little Background... | | | | | | | | | And For Further Study... | | | | | | | | | | Related Websites (Will Open in New Window)... | | | |
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BLUE PLACIDOLA [What's This?]
Today, you are likely to spend a great deal of time looking for a downtown retail store wanting to buy either a birthday gift for your uncle or a pair of red and purple designer socks. Be on the lookout for fairy dust that tastes like salt. Your Complete Scope
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During the American Revolution, the price of corn rose 10,000 percent, the price of wheat 14,000 percent, the price of flour 15,000 percent, and the price of beef 33,000 percent.
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"It's usually the last ounce of effort that tips the scales of success." -- Rick Beneteau
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CAP Common Agricultural Policy
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