Answer to Question #194629 in Economics for Yashitha Caveramma

Question

What is perfect competition

Answer 1

Pure or perfect competition is a theoretical market structure in which the following criteria are met:

• All firms sell an identical product (the product is a "commodity" or "homogeneous").
• All firms are price takers (they cannot influence the market price of their product).
• Market share has no influence on prices.
• Buyers have complete or "perfect" information—in the past, present and future—about the product being sold and the prices charged by each firm.
• Resources for such a labor are perfectly mobile.
• Firms can enter or exit the market without cost.