Explain any four features of perfect competition.

Answer: Perfect competition is a market with a large number of buyers and sellers dealing in a homogeneous product at a uniform price. Its features:

1. Large number of buyers and sellers: No single buyer or seller can influence the price; the firm is a price taker.
2. Homogeneous product: All firms sell identical products, perfect substitutes in quality, size and colour.
3. Free entry and exit: Firms can enter or leave the industry freely, so in the long run only normal profit is earned.
4. Perfect knowledge: Buyers and sellers have full knowledge of market conditions and prices.
5. Perfect mobility of factors: Factors of production can move freely from one industry or place to another.
6. Absence of transport cost: Transport costs are assumed absent, so the same price prevails throughout the market.
7. Single price: A uniform price prevails, determined by industry demand and supply.