Match the feature of perfect competition in List-I with its role in List-II:
| List-I | List-II | ||
|---|---|---|---|
| (A) | Homogeneous products | (I) | All buyers are aware of the market price |
| (B) | Perfect information | (II) | It is essential for the large number of firms to exist |
| (C) | Large number of firms | (III) | Buyers who switch away from one firm are readily served by the others |
| (D) | Free entry and exit | (IV) | A buyer gets the same product from any firm, so she can switch to another firm |
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → (A) - (IV), (B) - (I), (C) - (III), (D) - (II)
Each feature of perfect competition plays a part in making firms price-takers.
| List-I | List-II | Reason |
|---|---|---|
| (A) Homogeneous products | (IV) A buyer gets the same product from any firm, so she can switch to another firm | All firms sell an identical product, so a buyer can buy from any firm. |
| (B) Perfect information | (I) All buyers are aware of the market price | Buyers and sellers are completely informed about the price. |
| (C) Large number of firms | (III) Buyers who switch away from one firm are readily served by the others | With so many other firms, the extra demand is met without trouble. |
| (D) Free entry and exit | (II) It is essential for the large number of firms to exist | If entry were restricted, the number of firms could be small. |
NCERT (2026-27): “4.1 Perfect Competition: Defining Features … 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. Free entry and exit mean that it is easy for firms to enter the market, as well as to leave it. This condition is essential for the large numbers of firms to exist. If entry was difficult, or restricted, then the number of firms in the market could be small. Perfect information implies that all buyers and all sellers are completely informed about the price, quality and other relevant details about the product, as well as the market.” “4.1 Perfect Competition: Defining Features … Observe that since all firms produce the same good and all buyers are aware of the market price, the firm in question loses all its buyers. Furthermore, as these buyers switch their purchases to other firms, no “adjustment” problems arise; their demand is readily accommodated when there are so many other firms in the market.” |