Perfect Competition is the market structure in which there are many buyers and many sellers of a homogenous product selling at a uniform price.
- In this type of market, firms are price takers, meaning they accept the price determined by market forces of supply and demand.
Characteristics of Perfect Competition:
- Large Number of Buyers and Sellers:
- There are so many buyers and sellers that no single entity can influence the market price.
- Homogeneous Products:
- All firms sell homogenous products.
- Free Entry and Exit:
- Firms can freely enter or leave the market without significant barriers.
- Perfect Information:
- All buyers and sellers have complete knowledge of the market, including product prices and availability.
- Price Takers:
- Firms have no control over the price of their products.
- They must sell at the price determined by the overall market.
- No Government Intervention:
- There is no regulation or restriction by the government on the operations of buyers and sellers.