The correct answer is Option (3) → Buyers are price makers.
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The market consists of a large number of buyers and sellers. Correct. This is a fundamental characteristic of perfect competition. The presence of a vast number of both buyers and sellers ensures that no single participant has enough market power to influence the overall market price.
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Entry into the market as well as exit from the market are free for firms. Correct. This is another crucial feature. There are no significant barriers (like high capital costs, legal restrictions, or patents) that would prevent new firms from entering the industry or existing firms from leaving if they wish to. This ensures long-run normal profits.
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Buyers are price makers. This statement is incorrect. In a perfectly competitive market, individual buyers and sellers are price takers. This means they must accept the prevailing market price determined by the forces of overall market supply and demand. No single buyer or seller has the ability to dictate prices due to their small share of the total market.
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There is perfect knowledge. This is a correct feature. It implies that both buyers and sellers have complete, accurate, and readily available information about prices, products, and market conditions. This ensures that no buyer pays more than the market price and no seller charges less.
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