Question

explain the implications of very large number of buyers and sellers under perfect competition.

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Answer 1

There exist a large number of buyers and sellers in a perfect competitive market. The number of sellers is so large that no individual firm owns the control over the market price of the commodity. Thus, firms have no role to play other than supplying the required output at the existing market price and therefore a firm is a price taker and not a price maker.The implication for this is that no individual firm can influence the market price and all firms sell their individual output at a uniform market price.

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Answer 2

Answer:

1. The number of buyers and sellers operating under perfect competition is very large.

2. As the number of individual sellers very large, an individual seller cannot              fix the price.

3. Similarly no single buyer can fix the price or change it by his action.

4. Even if he increases or reduces demand, it will not effect total demand in the market.

5. Price of a product is determined by the interaction of total demand and total supply in the market.

Explanation:

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