Option 1 -> Large number of buyers and sellers is a key feature of perfect competition.
Option 2 -> Product differentiation is NOT a feature of perfect competition; products must be homogeneous (identical).
Option 3 -> Free entry and exit is a fundamental characteristic of perfect competition.
Option 4 -> Perfect information is an essential feature of perfect competition.
Hence, Option 2 -> In perfect competition, all firms sell homogeneous or identical products, meaning there is no product differentiation. Buyers view all products as perfect substitutes. Product differentiation is actually a characteristic of monopolistic competition, not perfect competition. This homogeneity ensures that no single firm can charge a higher price than others. -> correct