Question

The necessary condition for perfect competition :
I. Existence of large number of buyers and sellers
II. Existence of homogeneous product
III. Existence of free entry and free exit for firms
IV. Absence of transport costs

• A. I and IV are correct
• B. II, III and IV are correct
• C. I, II and III are correct
• D. All are correct

Answer 1

Answer: (C)

I, II and III are correct

Features of perfect competition include:

1. Large number of firms
   
2. Homogeneous product
   
3. Uniform price
   
4. Freedom of entry and exit
   
5. Perfect knowledge of industry conditions
   
6. Poor barriers to entry