Perfect Competition

Perfect Competition 

Market is a place where exchange of goods and services takes place. Most commonly form of market is Perfect competition market which is visible in most places easily. Perfect competition market is a place where there is complete absence of rivalry selling homogeneous product at same price. It is a free form of market having not much control over the price of product. There are some features of Perfect Competition.

1) Large Number of buyers and sellers 

There are large number of buyer and sellers available in the market. Seller sell the product at the predetermined price and buyer buy the product at the same price. No individual buyer and seller can influence the market by bargaining.

2) Homogeneous product 

Seller sell the product which are of same nature. For Instance vegetable market in which perfect substitutes are available and there is competition over the consumers.

3) Free Entry and Exit

Any firm can easily enter and exit the market.There are no legal formalities over the entry and exit of firm. Therefore in the long run firm earn Normal Profit and if extra profit is there then more firms enter the market that lead to distribution of profit which ultimate results in Normal profit.

4) No intervention by Government 

There is no role played by law in this market therefore no government intervene In its working. 

5) Perfect Knowledge 

In this market producer have perfect knowledge of the market structure and the price prevailing in the market.