Which of the following describes a characteristic of perfect competition?

In a perfectly competitive market, a fundamental characteristic is the presence of many buyers and sellers who are trading homogeneous products, which means that the products are identical or very similar in nature. This leads to perfect knowledge of the market among participants and ensures that no single buyer or seller can influence the market price.

Because there are many sellers, they must accept the market price as given; they have no price-setting power due to the competition. The homogeneity of products means consumers view each seller’s offerings as interchangeable, increasing the level of competition. This scenario results in efficient resource allocation and maximizes consumer and producer surplus.

The other characteristics mentioned in the other options, such as having few sellers with market power, significant barriers to entry, or price manipulation by firms, are traits of other market structures such as oligopoly or monopoly, rather than perfect competition. In perfect competition, there are low barriers to entry and exit, allowing for free market entry and ensuring competition among numerous firms.