ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -In economic theory, perfect competition occurs when all companies sell identical products, market share does not influence price, companies are able to enter or exit without barriers, buyers have perfect or full information, and companies cannot determine prices.

Detailed explanation-2: -Freedom of Entry and Exit In a perfect competition, every seller has the choice to enter or exit the industry. There are no barriers to their entry and exit. This characteristic ensures that there are no abnormal profits and losses in the long run.

Detailed explanation-3: -Perfect competition occurs when there are many sellers, there is easy entry and exiting of firms, products are identical from one seller to another, and sellers are price takers.

Detailed explanation-4: -Sellers are able to enter and exit the market freely. A monopoly forms when barriers prevent firms from entering a market that has a single supplier. While a perfectly competitive market has many buyers and sellers, monopoly markets have only one seller, but any number of buyers.

Detailed explanation-5: -Another important feature of perfect competition is free entry and exit. It means that any firm can close down and the leave the industry or any new firm can enter at any time. Further, this does not involve any legal, institutional, or technical hurdle.