Explain the feature 'large number of buyers and sellers' of a perfectly competitive market.

Explanation

There are a large number of buyers and sellers selling homogeneous product. Neither of them can affect the market price which is determined by the industry. If a firm tries to charge a little higher price than the market price, the buyers will buy the goods from other sellers and his sales will fall. Withfrawal by some buyers or sellers from the market will not affect the market price because the number of buyers ans sellers is large. The firm in this market is only a price taker. It may sell any amount of putput at the existing proce. Thus the demand curve i.e., AR curve of a firm is perfectly elastic and parallel to the X-axis.