Question

Explain 'large number of buyers and sellers' as a feature of perfectly competitive markets.

Answer 1

A perfectly competitive market is dominated by the presence of large number of buyers and sellers of a commodity, which means that there is no such buyer or seller in the market whose purchase or sale is so large as to impact the total sale or purchase in the market. Each buyer/seller has only a fractional share in the market demand/supply.

Hence, price is determined by the forces of market demand and market supply. No individual buyer or seller has any control over it. Each buyer/seller has to accept the price as it is in the market, and every firm is thus a price-taker.