Character of perfect market

Answer 1

1. Homogeneity: All products are identical, and there is no differentiation between them.

2. Perfect information: All buyers and sellers have access to the same information regarding prices and availability of goods.

3. Large number of buyers and sellers: There are many buyers and sellers in the market, none of whom have the power to influence prices.

4. Low barriers to entry and exit: It is easy for new firms to enter the market and for existing firms to exit if needed.

5. Fungibility of goods: Goods are easily replaceable and interchangeable with each other.

6. Perfectly elastic demand and supply: Demand and supply are perfectly responsive to changes in price.

7. Absence of externalities: There are no external costs or benefits associated with the production or consumption of goods.

8. Free mobility of resources: Resources can move freely between different markets.

9. Absence of government intervention: There is no government regulation or interference in the market.

10. Rational behavior of buyers and sellers: Buyers and sellers act rationally and aim to maximize their utility and profits, respectively.