PERFECT COMPETITION

PERFECT COMPETITION



It is an industry in which



(a) Many firms sell identical products to many buyers.

(b) There are no restrictions on entry into the industry.

(c) Established firms have no advantage over new ones.

(d) Sellers and buyers are well informed about prices.


Price takers


Firms in perfect competition are price takers.
A price taker is a firm that cannot influence the market price and that sets its own price at the market price.