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Perfect Competition

Characteristics

A perfect competitive market has the following characteristics:

• All units are homogeneous. Buyers have no preference for the products of any particular seller.

• There are many buyers and sellers so influence of buyer/seller has no influence on the market price. Each individual buyer comprises such a small part that they will have no influence on the market price.

• Buyers have perfect knowledge.

• There must be no barriers to the movement of buyers from one seller to another.

• There are no restrictions on the entry of firms into the market or on their exit from it.

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