ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Perfect competition describes an imaginary market condition where all consumers have access to the same products and information. In this type of economy, all firms must offer the lowest price possible or risk being undercut by their competitors.

Detailed explanation-2: -In a perfectly competitive industry, each firm is so small relative to the market that it cannot affect the price of the good. Each perfectly competitive firm is a price taker. Therefore, numerous firms means that each firm is so small that it is a price taker.

Detailed explanation-3: -The correct sequence of the market structure from most to least competitive is perfect competition, imperfect competition, oligopoly and pure monopoly.

Detailed explanation-4: -Perfect competition is a hypothetical market structure in which there are very many firms, each of which represents an infinitesimal share of the market. In a perfectly competitive market, if any firm is able to earn an economic profit, other firms will immediately enter the market, driving economic profit to zero.