If we need some things we go to market and enquire about the price of a commodity on the many shops/ firms at last we purchase the commodity on the price by which we are satisfied thus perfect competition is the form of market under which there are many firms are selling a homogenous product with no firm large enough relative to the entire market to be able to influences market price.
Definition of Perfect Competition Market:- According to Mrs. Joan Robinsons “Perfect competition market prevails when the demand for the output of each producer is perfectly elastic”.
Main assumptions or features of perfect competition are as under:-
- Large number but small size of Buyers and Sellers
- Homogeneous Products
- Perfect Knowledge
- Free Entry and Exit of Firms
- Free from checks
- Perfect Mobility
- Lack of Transport costs
- Lack of Selling costs
- Same Price
Perfect competition is the situation of a market in which there are many buyers and sellers of a same products. Under this type of market price of the commodity is determined by the industry. All the firms can sell any number of units of the commodity.