Question

Point out the essential features of pure competition.

State essential requisites of pure competition.

Answer 1

1. Large Number of Buyers and Sellers: No individual buyer or seller can influence the price. Each participant contributes a very small share to total demand or supply.
2. Homogeneous Product: All firms sell identical products that are perfect substitutes for one another, so no brand has an advantage.
3. Free Entry and Exit: Firms can freely enter or leave the market. This ensures that profits are normal in the long run because new firms enter when profits rise and exit when losses occur.