structures, which they refer to as perfect competition, mono- poly, monopolistic competition, oligopoly. Thissection consi-
dersthe case of a firm operating in perfectly competitive market
structure, while the next two sections consider the behavior of
firm operating under the other three types ofmarket structures.
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Conditions of Perfect Competition
Four characteristics or conditions must be present for a
perfectly competitive market structure to exit. First, there must
be many firms in the market, nono of which is largein terms of
its sales. Second, firms should bebable to enter and exit the
market easily. Third, each firm in the market produces and sells
a nondifferentiated or homogeneous product. Fourth, all firms
and consumers in the market have complete information about
prices, product quality, and product techniques.
