ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The price is determined by demand and supply in the market-not by individual buyers or sellers. In a perfectly competitive market, each firm and each consumer is a price taker. A price-taking consumer assumes that he or she can purchase any quantity at the market price-without affecting that price.

Detailed explanation-2: -The fundamental condition of perfect competition is that there must be a large number of sellers or firms. Homogeneous Commodity is the second fundamental condition of a perfect market. The products of all firms in the industry are homogeneous and identical. Was this answer helpful?

Detailed explanation-3: -Under perfect competition, there are large number of buyers and sellers for a homogeneous product. No single seller or buyer can influence the price.

Detailed explanation-4: -A perfectly competitive firm is known as a price taker because the pressure of competing firms forces them to accept the prevailing equilibrium price in the market. If a firm in a perfectly competitive market raises the price of its product by so much as a penny, it will lose all of its sales to competitors.