Describe perfect competition and give an example. What will be an ide

QUESTION

Describe perfect competition and give an example.

What will be an ideal response?

ANSWER

In a perfectly competitive market, there are many sellers of virtually identical products. It is very easy to enter and exit this market and there are many buyers. Price is rarely used to differentiate product. The agriculture industry is the closest we have to a real-life example of perfect competition—an ear of corn from one farm is virtually the same as an ear of corn from another farm.