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Questions
Explain ‘large number of buyers and sellers' features of a perfectly competitive market.
Explain the implication of large number of buyers in a perfectly competitive market
There are a large number of buyers in a perfectly competitive market. Explain the significance of this feature.
Solution
A perfectly competitive market is a market which consists of buyers and sellers. They produce a homogeneous product. When the number of buyers is more, the demand of an individual buyer is only a small portion of the market demand. Individual buyers cannot influence the market price of a good by varying their demands, and thus, an individual buyer is a price taker and not a price maker.
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