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Perfect competition refers to the situation where there are large number of prouder and consumers are exists in the market. Producers are selling homogenous goods in the market. Individual firms or consumers cannot influence the market supply of demand. Firms and consumers are price takers. The equilibrium price and quantity is determined by the equilibrium between market demand and supply.
In the perfect competition, firms are producing output at the point where the demand and supply intersects each other. In the perfect competition marginal cost (MC) curve is the supply curve. Also demand curve, average revenue (AR) cure and marginal revenue curve (MR) curve coincide with each other.
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