Explain the following characteristics of the perfect competitions homogeneous product free entry and exit
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Answer:
What is a Perfectly Competitive Market?
Before we look at the features, look at the following example: You go to a vegetable market and inquire about the price of tomatoes from a shopkeeper. He quotes Rs. 5 per kg. You go to a few more shops and enquire from many shopkeepers. They all quote the same rate. Based on this, you make the following observations:
There are many buyers and sellers in the tomatoes market
All shopkeepers are selling tomatoes at Rs. 5 per kg.
There is product homogeneity. This means that all tomatoes appear to the same and you are unable to distinguish one from the other. This is an example of a perfectly competitive market.

Features of Perfect Competition
An essential aspect of perfect competition is the absence of any monopolistic element. These are the three essential features of perfect competition:
The number of buyers and sellers in the market is very large. These buyers and sellers compete among themselves. Due to the large number, no buyer or seller influences the demand or supply in the market.
The commodity sold or bought is homogeneous. In other words, goods produced by different firms are identical in nature.
Firms can enter or exit the market freely.
Apart from these essential features, there are some more conditions attached to the perfect competition.
Additional Features of Perfect Competition
Buyers and Sellers have a perfect knowledge of:
the quantities of stock of goods in the market
the conditions of the market
prices at which transactions of sale or purchase are happening.
There are facilities that help the movement of goods from one center to another.
Buyers have no preference between different sellers.
Also, buyers have no preference between different units of the commodity offered for sale.
Sellers have no preference between different buyers.
At any given point in time, the goods are bought or sold at a uniform price. In other words, all firms must accept the pricedetermined by the market forces to total demand and supply.
When a market operates under the condition of perfect competition, buyers and sellers have perfect knowledge and perfect mobility. Therefore, if a seller tries to raise the price above that charged by others, he loses customers. The stock market is a great example of perfect competition.