Answer:
Perfect knowledge means that both the buyers and sellers have full knowledge about the prices and costs prevailing in the different parts of the market. All firms have equal access to technology and inputs. This ensures the same per unit cost of production by all the firms in the industry.
Implication of perfect knowledge: No firm is in position to change a different price and no buyer will pay a higher price. As a result, uniform price prevails. Since, there is uniform price and uniform cost, all firms earn uniform profits because profit equals price-cost.
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