Question

Explain "perfect knowledge about the markets" feature of perfect competition.

Answer 1

In a perfect competition, both buyers as well as the sellers are fully aware of the conditions prevailing in the market. This implies that the buyers are fully aware of the prevailing market price of the product at different places and the sellers are also aware of at what prices are the buyers willing to buy the product. The implication of this feature is that if any individual firm is charging higher (or lower) price for the homogeneous product, then the buyers will shift their purchase to the other seller (or shift their purchase from other seller to the firm selling at lower price).
Implication- As the buyers and the sellers are fully aware of the market conditions so no seller can either sell their products at higher prices or at lower prices than the market price.