What is perfect competition?

Perfect competition is one of the market structures in Economics. It is characterized by the presence of numerous buyers and sellers in the market. Also, the products are usually homogeneous. This means that there is little to absolutely no difference in the products being sold. The prices are also very similar. Lastly, the barriers to entry or exit are deemed to be very little to nonexistent.

The most common example of perfect competition are fruit and vegetable stalls found in the local market. In this case, there are many buyers and sellers of the same kind of fruits or vegetables. The prices are the same in every stall, and people who want to enter or exit the competition can easily do so.