Assumptions
- Commodity price is given and constant for the consumers.
- Consumers' taste and preferences, habits, incomes are also considered to be constant.
- Prices of prolific resources of a commodity and that of other related goods (substitute or complimentary) are known as well as #constant.
- Industry is easily availed with factors of production at a known and constant price compliant with the methods of production in use.
- Prices of the products that the factor of production helps in producing and the price and quantity of other factors are known and constant.
- There is perfect mobility of factors of production between occupation and places.
The above mentioned points relate to a perfectly competitive market but can be further extended to monopolistic competition, oligopoly, monopoly and monopsony markets.
Read more about this topic: Partial Equilibrium
Famous quotes containing the word assumptions:
“Why did he think adding meant increase?
To me it was dilution. Where do these
Innate assumptions come from?”
—Philip Larkin (1922–1986)
“All of the assumptions once made about a parent’s role have been undercut by the specialists. The psychiatric specialists, the psychological specialists, the educational specialists, all have mystified child development. They have fostered the idea that understanding children and promoting their intellectual well-being is too complex for mothers and requires the intervention of experts.”
—Elaine Heffner (20th century)
“What a man believes may be ascertained, not from his creed, but from the assumptions on which he habitually acts.”
—George Bernard Shaw (1856–1950)