List the characteristics needed for a perfectly competitive market. Provide a simple explanation of each -...

List the characteristics needed for a perfectly competitive market. Provide a simple explanation of each - your explanation should explain how does that characteristic enable a perfectly competitive firm to form/exisit.

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Expert Solution

Perfectly competitive market : It is a type of market in which we have large number of buyers as well as sellers for a particular product.

Characteristics

1. Product is homogeneous : The product in perfectly competitive market is similar ie having same features which is sold by large number of people due to which there is a huge competition among the sellers.

2. No barriers to entry and exit : Anybody is free to enter the market , there is no restriction on anyone for entry and exit from the perfectly competitive market.

3. Large buyers and sellers : As the definition says, this type of market consists of large numbe rof buyers and sellers due to which competition raises.

4. Knowledge of product : Since there is alot competition, the knowledge of product becomes important for tthe sellers in order to attract the customers and influence them to buy the product.

Rahul Sunny answered 1 year ago

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