Final answer:
True, individuals must have the need, ability, willingness, and authority to buy for a market to exist, but perfectly competitive markets require additional conditions such as many buyers and sellers, identical products, full information, and free entry and exit from the market.
Step-by-step explanation:
True, the four requirements of a market are that the individuals in the market must have a need for the product and the ability, willingness, and authority to buy it. This statement reflects key components of market demand and consumer behavior. However, for a market to be considered perfectly competitive, there are additional conditions that must be met:
- There must be many sellers and buyers in the market.
- Sellers should offer identical products, leading to no single buyer or seller having the market power to influence the price of the product.
- Freedom of entry and exit in the market is necessary, so providers can offer their goods and services, or leave if they choose.
- Both buyers and sellers must act independently and compete with each other, without collusion.
- An efficient market requires full information about a product's price and quality to allow buyers and sellers to make well-informed decisions.
While desire and ability to purchase are fundamental to demand, to reach market equilibrium, and for free market economy to work best, several other conditions such as adequate competition, informed participants, resource mobility, and accurate price signals are crucial to avoid market failures and to ensure efficient functioning of the market.