Some Key Free Market Assumptions

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Some Key Free Market Assumptions

1. Consumers possess perfect information they know
   all of the options, prices, and quality
2. Perfect competition exists there are many
   producers competing with each other, and no
   singly supplier is a large enough supplier to
   significantly affect the price. Prices set by
   supply demand.
3. Mobility of factors capital, labor, and
   consumers are free to go elsewhere if the dont
   like conditions
4. Firms have the single minded goal of maximizing
   profits
5. Consumers have the goal of maximizing utility by
   pursuing the most satisfying products at the best
   available price.