Question

What is perfect competition and its features?

Answer 1

Perfect competition is considered to be that condition where every company or firm in the market is selling identical products and the market share of the company has no impact on the price of the product.

The following are some of the features of perfect competition:

1. Presence of many buyers and sellers in the market.
2. The market has no barriers to entry and exit.
3. There are no transaction costs involved.
4. Buyers and sellers have complete knowledge of the price in the market.
5. All the companies in the market are offering a similar product.

Also read:

• The Theory of the Firm Under Perfect Competition
• Perfect Competition Defining Features
• Difference Between Price Ceiling and Price Floor
• Market Equilibrium

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