'Economics of risk' deals with dropping which of these assumptions about the perfectly competitive market?

Free entry and exit

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The parties involved in the transaction are the only ones affected by the transaction

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The consumers and firms have perfect knowledge of the output, inputs and their prices

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The actions of a single buyer or seller in a market have a negligible effect

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Solution

The correct option is C
The consumers and firms have perfect knowledge of the output, inputs and their prices

One of the assumptions of a perfectly competitive market is that the consumers and firms have perfect knowledge of the output, inputs and their prices. The dropping of this assumption is dealt with as economics of risk.

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Similar questions

Q. Any economic transaction only affects the parties involved i.e. buyers and sellers. When this assumption is wrong, the market displays .

Q. ________refers to a market structure in which a large number of firms produce identical goods and sell them at a uniform price, where firms have the freedom of entry and exit and all the buyers and sellers have full knowledge of the market conditions.

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(b) freedom of entry and exit to firms

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