Question

Discuss your opinion of three characteristics of perfect competition.

Answer 1

Three characteristics of perfect competition are:

1) There are large number of buyers and sellers in perfect competition.

2). The product produced under this market are homogeneous in colour, size, weights and in prices so nobody can differentiate the products. It means all products under this market are homogeneous.

3).

The industry is price maker and firms are price taker. It means price are determined by supply and demand of products at aggregate level. The firm can sell as much quantity of goods at given price but cannot increases price because it would lose whole market and price below the given price is not wise decision.