A perfectly competitive market has following features:

(i) Market consists of large number of buyers and sellers

(ii) All firms produce homogeneous goods

(iii) Each buyer and seller is a price-taker

Choose the correct option - 

The correct answer is ​All (i), (ii) and (iii)

Key Points

Perfect Competition:

• Pure or perfect competition is a theoretical market structure in which the following criteria are met:​​
  • There are a large number of producers and consumers competing with one another in this kind of environment.
  • Perfect competition occurs when all companies sell identical products.
  • Market share does not influence the price.
  • Companies are able to enter or exit without barriers.
  • Buyers have “perfect” or full information, and companies cannot determine prices.Each buyer and seller is a price-taker
  • In other words, it is a market that is entirely influenced by market forces.

Additional Information 

Imperfect Competition:

• Imperfect competition exists whenever a market, hypothetical or real, violates the abstract tenets of neoclassical perfect competition.
• In this environment, companies sell different products and services.
• Set their prices, fight for market share, and are often protected by barriers to entry and exit.