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Many large corporations, such as General Motors and Apple, operate in markets that are not even...

Many large corporations, such as General Motors and Apple, operate in markets that are not even close to perfectly competitive. But unlike the products these companies sell, shares of these firms’ common stock are bought and sold in what could be described as a perfectly competitive market. Based on the three conditions that make a market perfectly competitive, what characteristics of the purchase and sale of shares of stock of a large company like GM or Apple, are consistent with perfect competition?

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Shares of one company can be consistent with the attributes of perfect competition. Following are the three characteristics of buyimg and selling of shares of stock of a big organizations are consistent with perfect competition:

A large number of buyers and sellers of stock: There is a huge number of buyers and sellers of stock of these large firms such as Apple and General Motors.

Homogeneous Products: All the shares are identical in nature. Neither the seller nor the buyer can get extra benefit from dealing with dealer A or B. One particular share cannot have extra benefit as compared to another share of the same company.

Free entry and exit: Buyers, as well as sellers of shares, can anytime take free entry and exit from the share of one company by selling or buying them. There is no obligation for the buyer and seller to remain in the market of one company share.

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