(a) Define a market. (b) Explain four characteristics of a perfect market.

Explanation

(a)Market is a point or place or any means of communication whereby the sellers and buyers can communicate with one another, to exchange goods and services at prices determined by the market forces.

(b) Characteristics of a perfect market are:

(i) None of the sellers or buyers will dominate the market.

(ii) The goods are identical in the market.

(iii) There must be perfect knowledge about the price of the commodity.

(iv) There is free entry into the market for new firms and free exit for the existing ones.

(v) Factors of production are transferred easily to where they are needed.

(vi) The commodity bears the same price tag throughout the market.