ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -In a perfectly competitive market: all firms sell an identical product; all firms are price-takers; all firms have a relatively small market share; buyers know the nature of the product being sold and the prices charged by each firm; the industry is characterized by freedom of entry and exit.

Detailed explanation-2: -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-3: -Perfect competition, a theoretical market structure that features no barriers to entry, an unlimited number of producers and consumers, and a perfectly elastic demand curve.

Detailed explanation-4: -In the perfect or pure competition market, there are a large number of firms each producing the same product (as called a standardized or homogeneous product). Since the number of firms is very large, no one firm can influence the market price, thus each firm has no market power and each is a price taker.