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In a perfectly competitive market the buyers treat products of all the firms as homogeneous. Explain the significance of this feature.

Answer:

In a perfectly competitive market, the buyers treat products of all the firms as homogeneous. This implies that all the firms in perfect competitive market produces homogeneous product. This further implies that the product of each and every firm in the market is perfect substitute to other product in terms of quantity, quality, colour, size, features, etc. This indicates that the buyers are indifferent between the products of different firms. Due to homogeneity of the products, existence of uniform price is guaranteed.

Implication: The products of different firms are qualitatively and quantitatively homogeneous.