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Explain ''large number of buyers and sellers'' feature of a perfectly competitive market. |
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Answer» Solution :There are very large number of buyers in perfect competition. No individual BUYER can influence the market price because of its large number. Every buyer buys only a fraction from the total sale of the product. Buyers like firms have to accept the price which is FIXED by the supply and DEMAND of the whole industry. Buyers can buy any quantity of product at this price. Similarly sellers are ALSO very large in number having very small share in the market. Sellers cannot influrence the market price and can sell any quantity on the prevailing price. That is why firms are called price-takers in perfectly competitive industry. |
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