ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The most fundamental is perfect competition, in which there are large numbers of identical suppliers and demanders of the same product, buyer and sellers can find one another at no cost, and no barriers prevent new suppliers from entering the market. In perfect competition, no one has the ability to affect prices.

Detailed explanation-2: -Competition can constrain buyers and sellers to be price-takers. The interaction of supply and demand determines a market equilibrium in which both buyers and sellers are price-takers, called a competitive equilibrium. Prices and quantities in competitive equilibrium change in response to supply and demand shocks.

Detailed explanation-3: -In a market characterized by perfect competition, price is determined through the mechanisms of supply and demand. Prices are influenced both by the supply of products from sellers and by the demand for products by buyers.

Detailed explanation-4: -Perfect Competition # A perfectly competitive firm is a price taker and faces a horizontal demand curve.