Statement I: Under perfect competition, each individual buyer and seller is very small compared to the size of the market.
Statement II: The existence of a large number of firms in a market means that the product of each firm is identical.
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Statement I is true but Statement II is false.
Statement I: Under perfect competition, each individual buyer and seller is very small compared to the size of the market. — True. This is what a large number of buyers and sellers means.
Statement II: The existence of a large number of firms in a market means that the product of each firm is identical. — False. An identical product comes from a separate feature, the homogeneous product. Many firms could still sell different products; the number of firms tells us only that each is small.
NCERT (2026-27): “4.1 Perfect Competition: Defining Features … A perfectly competitive market has the following defining features: “4.1 Perfect Competition: Defining Features … The existence of a large number of buyers and sellers means that each individual buyer and seller is very small compared to the size of the market. This means that no individual buyer or seller can influence the market by their size. Homogenous products further mean that the product of each firm is identical. So a buyer can choose to buy from any firm in the market, and she gets the same product. …” |