Question
Explain the implication of 'perfect knowledge about market' under perfect competition.
Solution
All the buyers and sellers operating under perfect competition have perfect knowledge of the market conditions. Perfect knowledge means that both buyers and sellers are fully informed about the market price. For example, every seller knows the total quantity supplied and sold on a particular day or during a week. Similarly, no firm is in a position to charge a different price and no buyer will pay a higher price. As a result a uniform price prevails in the market.
