(i) Homogeneous product: Homogeneous product is a product which is identical in size, colour, packing etc. Due to this, all the firms become price taker.
(ii) Entry and Exit: Under perfect competition, a firm can enter or leave any industry. There are no legal restrictions on entry or exit. Accordingly, whenever there are supernormal profits, some new firms will enter the industry and in case of losses, some existing firms will leave the industry of course, in the long run.
(iii) A large number of buyers: Under perfect competition like a large number of sellers, the number of buyers is also very large. But like an individual firm or producer or seller, an individual buyer cannot influence the price of a commodity. Each buyer makes transactions in this market at a prevailing price.
(iv) A large number of sellers: Under perfect competition, the number of firms selling a particular commodity is so large that any increase or decrease in supply by an individual seller fails to impact the price of the commodity in the market. The individual seller can sell whatever amount it wishes to sell at the existing price of a commodity. All sellers in this market are price takers only.
