Definition of Perfect competition:
The situation prevailing in a market in which buyers and sellers are so numerous and well informed that all elements of monopoly are absent and the market price of a commodity is beyond the control of individual buyers and sellers.
Pure or perfect competition is a theoretical market structure in which the following criteria are met:.
All firms sell an identical product (the product is a "commodity" or "homogeneous").All firms are price takers (they cannot influence the market price of their product).Market share has no influence on prices.Buyers have complete or "perfect" information—in the past, present and future—about the product being sold and the prices charged by each firm.Resources for such a labor are perfectly mobile.Firms can enter or exit the market without cost.
The theoretical free-market situation in which the following conditions are met: (1) buyers and sellers are too numerous and too small to have any degree of individual control over prices, (2) all buyers and sellers seek to maximize their profit (income), (3) buyers and seller can freely enter or leave the market, (4) all buyers and sellers have access to information regarding availability, prices, and quality of goods being traded, and (5) all goods of a particular nature are homogeneous, hence substitutable for one another. Also called perfect market or pure competition.
How to use Perfect competition in a sentence?
- There was an instance of perfect competition which was indicative of the overall thriving nature of the marketplace we were involved in.
- I thought they were the perfect competition because they had the drive and the passion for what they were doing.
- Under circumstances of perfect competition, no single buyer or seller can dominate the prices to be paid.
- If you find yourself in perfect competition you must try to market your product as best as you can to beat your competitors.
Meaning of Perfect competition & Perfect competition Definition