Explain the features of perfect competition.

The important features of perfect competition are listed below:

• Large number of buyers and sellers: In perfect competition there are so many buyers and sellers that each one of them has a little influence over the market demand and on the market price of the commodity.

• Homogenous product: All the firms under perfect competition produce homogenous products. Homogeneity of the product refers not only to the physical characteristics of the products like size, design, quality etc but also the environmental factors like location of the seller, behaviour of the seller. Thus the products are same both physically as well as environment-wise.

• Perfect knowledge: Firms under perfect competition have perfect knowledge about the market conditions like price prevailing in the market, available techniques of production etc.

• Absence of transport costs: Buyers and sellers in perfectly competitive market incur no transport costs in purchasing or selling goods. This helps to maintain the uniform price throughout the market.