Explain the implication of large number of buyers in a perfectly competitive market.

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Solution

The number of buyers of a commodity is very large under perfect competition. It is so large that the demand of an individual buyer is only a small fraction of the market demand for a commodity.

It implies that by varying his demand, an individual buyer cannot affect total market demand for a commodity. Accordingly, an individual buyer cannot influence market price of the commodity. So that, for an individual buyer, market price is given. He can buy any quantity at the existing price of the commodity. An individual buyer is a price taker.

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