Explain the implications of the following ina perfectly competitive market: (a) Large number of sellers (b) Homogeneous products

Explain the implications of the following ina perfectly competitive ma

1.	Explain the implications of the following ina perfectly competitive market: (a) Large number of sellers (b) Homogeneous products
Answer» Solution :(a) Large number of sellers means that number of firms are large enough so that contribution to total OUPUT of the industry by any individual firm is negligible. So, no single firm is in a position to influence the market price on its own by chaining its own output, Thus, Price REMAINS unchanged. (b) HOMOGENEOUS products means that buyers treat products of all the firms as same in all respect as homogeneous product. As such no firm can charge a higher price because no buyer is willing to pay the same. Then market price remains the same for all the firms.