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Meaning and Types of Markets — Economics STD 10 — Question

ICSE BoardEnglish MediumSTD 10EconomicsMeaning and Types of Markets4 Marks
Question
Define a perfect market. Explain any four features of perfect competition.###Under which type of a market are producers price takers"? Explain its three characteristics.###What is perfect competition? Describe any three characteristics of perfect competition.
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Answer

Perfect competition is a form of the market in which there is a large number of buyers and sellers and where homogeneous product is sold at a uniform price.
Characteristics of Perfectly Competitive Market:
(1) Large Number of buyers and sellers: The number of buyers and sellers of a commodity is so large that no individual buyer or seller can influence the market price. Accordingly, a firm under perfect competition is only a price taker, not a price maker. (2) Homogeneous Products: All sellers sell identical products. Accordingly, uniform price prevails in the market.
(3) Free Entry and Exit: A firm can enter or leave the industry any time. Consequently, only normal profits prevail in the long run.
(4) Perfect Knowledge: Buyers and sellers have full knowledge regarding the prevailing market price.
(5) Perfect Monopoly: There is perfect monopoly in the market both for goods and factors of production.

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