What is a characteristic of perfect competition?

In a perfectly competitive market, one of the defining characteristics is the presence of many buyers and sellers. This abundance of participants ensures that no single entity has the power to influence market prices. In addition, low barriers to entry allow new firms to enter the market easily when they see an opportunity for profit, which further contributes to competitive pressures among existing firms. This accessibility leads to a situation where firms must operate efficiently to survive, as consumers can switch to different sellers offering similar goods or services.

This dynamic also reinforces the idea that individual firms are price takers rather than price makers, as they must accept the market price determined by the overall supply and demand in the market. Thus, the combination of many buyers and sellers along with low barriers to entry is fundamental to the structure and functioning of perfect competition.