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The essence of perfect competition
The market price is determined by the ratio of the supply of goods and services from producers and the demand from consumers. Although the seller sets the price taking into account the cost price of the product and the desired profit, he always takes into account the market situation.

For example, if the price is much higher greece telegram number database than the buyer is willing to pay, the deal will not take place. If the balance shifts downwards, the manufacturer will not receive a profit, which is unprofitable for him. Accordingly, the equilibrium price on the market is formed under conditions when exactly the amount of goods that consumers are willing to buy is offered.



Source: Eduardo Soares / unsplash.com

Depending on how the struggle of economic entities is conducted on the market, several types of competition are distinguished, and one of them is perfect competition. However, in the real economy it is extremely rare, and more often imperfect competition is observed in various forms.

The key conditions for the formation of perfect market competition are the following factors :

a huge number of sellers and buyers, none of whom individually is capable of influencing the market situation;
The product is divisible and homogeneous, for example grain of the same quality;
no restrictions on entry and exit from the market – in other words, any producer can join the trade;
availability of production factors, absence of any restrictions or external pressure;
freedom of access to market information – every buyer and seller sees current prices.
If at least one of the parameters is missing, then perfect competition turns into imperfect competition - for this reason, many economists perceive this type of competition as an ideal model that can be approached, but in reality such a market situation is practically impossible to achieve.