Question
There are large numbers of buyers in a perfectly competitive market. Explain the
significance of this feature.
Solution
The number of buyers and sellers operating under perfect competition is very high. As the
number of individual sellers very large, an individual seller cannot fix the price. Similarly
no single buyer can fix the price or change it by his action. Even if he increases or reduces
demand, it does not make any effect on the total demand in the market. Price of a product
is determined by the interaction of total demand and total supply in the market. Hence
every seller and buyer under perfect competition is a price taker and not a price maker.
