Consider the three characteristics of the perfectly competitive market:

1. Many small firms, with no power to affect the price they charge; they must accept the price the market gives them.

2. A homogeneous product; a commodity; there is no way to distinguish your product from the competition. A product is viewed as indistinguishable based on origin and provider.

3. Very easy entry into and exit from the market and wiping out any economic profits as new firms enter the market and increase the supply. Comment on the following questions:

Do you think that a perfectly competitive market is possible, and if not , why is that?

Are there any markets for goods or services that are close to a perfectly competitive market?

What characteristics of a perfectly competitive market do they have and what do they lack