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Question
Explain the following feature of perfect competition:
Homogeneous products
Solution
Homogeneous products refer to those products which are identical in quality, shape, size, colour, design, packing, etc. They are identical in the eyes of their buyers. Thus, buyers have no bias towards any particular seller. They find no reason to prefer the product of one seller to the product of another seller. No seller can increase the price of his product because the goods they sell are the same. If he does so, he will lose all his customers. Nor will anyone sell the product at a price lower than the market price. Why should anyone sell at a lower price when he can sell at a higher price? It is because of this feature that firms are able to earn only normal profits.
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RELATED QUESTIONS
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Homogeneous product is a feature of this market.
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Homogeneous product is a feature of this market.
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Large number of buyers and sellers
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