Perfect competition
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Perfect competition is an economic term referring to the condition that there is so much competition between vendors that a seller would lose customers if he raised prices at all. Such a competitive market is very good for the consumer. A perfectly competitive market must:
- Have products which are perfect substitutes for each other.
- Have many companies in the market.
- All the companies must have identical costs for their supplies.
- The consumers must be fully informed about the products.
The market for dairy products is close to perfect competition.