Final answer:
Perfect competition involves firms producing identical products and being price takers.
Step-by-step explanation:
Perfect competition is a type of market structure where there are many firms producing identical products, and sellers are price takers. This means that each firm in a perfectly competitive market has no control over the price of its product and must accept the market price.
For example, in a perfectly competitive market for wheat, all farmers produce wheat that is identical, and none of them have the power to set the price.
They can only sell their wheat at the prevailing market price.
Overall, perfect competition ensures that no firm has a significant market share, and all firms have an equal chance to enter or exit the market.