Answer to Question #272883 in Microeconomics for Sahani

Question

Explain the characteristics of perfect competitive market

Answer 1

Following are the characteristics of perfect competitive market:

• Large number of small buyers and sellers exist in the market.
• There are no barriers to entry and exist for new and existing firms respectively.
• Both sellers and buyers have perfect knowledge of the entire market.
• A perfectively competitive market contains homogeneous products that are perfect substitutes of each other.
• No government intervention in terms of restrictions and obligations.
• An individual firm is price taker in the market.
• An individual firm produces small portion of total output in the market.