What Is Perfect Competition?

When there are tons of buyers and sellers of an identical good, then none of them have any market power. We call this perfect competition. A classic case is if you're selling wheat into the global market. There are zillions of wheat farmers and zillions of buyers from all round the world. This means that all wheat farmers will likely end up charging the exact same price for a ton of wheat. Yet wheat farmers don't spend much time thinking about what price to charge. They look up the current price to see what they'll get for it.