Which of the following best defines perfect competition?

The definition of perfect competition is characterized by a market structure in which there are numerous firms, each producing a standardized product. This means that the products offered by each firm are identical or very similar, so consumers perceive them as interchangeable. In such a market, no single firm has the power to influence the overall market price; instead, the price is determined by the forces of supply and demand.

The presence of many sellers ensures that competition is strong, leading to prices that reflect the cost of production and efficiency in resource allocation. Additionally, the barriers to entry in a perfectly competitive market are low, allowing new firms to enter easily if they see an opportunity, thereby contributing to the competitiveness of the market.

In contrast, options that describe a market with differentiated products, a single seller influencing prices, or high barriers to entry do not align with the principles of perfect competition. These characteristics correspond to other market structures, such as monopolistic competition or monopoly, which have different implications for price-setting and market behavior.