Question

What are the features of perfect competition?

Answer 1

Features of Perfect Competition

An essential aspect of perfect competition is the absence of any monopolistic element. These are the three essential features of perfect competition:

1. The number of buyers and sellers in the market is very large. These buyers and sellers compete among themselves. Due to the large number, no buyer or seller influences the demand or supply in the market.
2. The commodity sold or bought is homogeneous. In other words, goods produced by different firms are identical in nature.
3. Firms can enter or exit the market freely.

Apart from these essential features, there are some more conditions attached to the perfect competition.

Additional Features of Perfect Competition

1. Buyers and Sellers have a perfect knowledge of:
1. the quantities of stock of goods in the market
2. the conditions of the market
3. prices at which transactions of sale or purchase are happening.
2. There are facilities that help the movement of goods from one center to another.
3. Buyers have no preference between different sellers.
4. Also, buyers have no preference between different units of the commodity offered for sale.