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i. There are many buyers in the market –there is no single buyer who can influence the price of the product.
ii. The buyers have all the relevant information about the market/perfect knowledge about the market –such that they always act rationally when making procurement/buying decisions, (to buy/not to buy the products.)
iii. The product of the firm does not have the close substitute – therefore there is no competition in the market.
iv. The price is set by the producer – the producer is thus price maker/price not set by market forces/no other firm to influence/rival
v. There is no free entry of new firms in that product market. – since (substantial) barriers to entry exit/restrictions to entry of other firms into the industry exist (that other firms cannot fulfill) (Hence, even if the market is experiencing shortage of the commodity, new firms will not be allowed to come and fill the gap).
steve williams answered the question on December 30, 2017 at 13:30
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