What is a characteristic of perfect competition?

In a perfectly competitive market, one of the defining characteristics is the presence of homogeneous products and the existence of many buyers and sellers. Homogeneous products mean that the goods offered by different sellers are essentially identical, making it impossible for a seller to charge a higher price than the market price without losing customers. This type of market allows each buyer and seller to be a price taker rather than a price maker.

Additionally, the presence of many buyers and sellers ensures that no single entity can influence the market price through its own actions. Because there are numerous participants in the market, any change in supply or demand is reflected in the market equilibrium rather than being affected by the dominance of a few firms. As a result, competition drives innovation, efficiency, and fair pricing, benefiting consumers and the economy as a whole.