Perfectly competitive markets are characterized by
A)conditions that discourage new firms from entering the market.
B)conditions that allow firms to determine how much they wish to produce, without influencing the market price.
C)conditions that presume that each firm produces a unique product.
D)conditions that force firms to advertise their product heavily, to compete with other producers.

Question

​Perfectly competitive markets are characterized by
A)​conditions that discourage new firms from entering the market.
B)​conditions that allow firms to determine how much they wish to produce, without influencing the market price.
C)​conditions that presume that each firm produces a unique product.
D)​conditions that force firms to advertise their product heavily, to compete with other producers.

Quizplus · Accepted Answer

Perfectly competitive markets are characterized by the inability of any individual firm to influence the market price. This means that all firms are price takers, and must accept the market price for their goods or services. Additionally, there is relatively easy entry and exit to the market, so new firms can enter if they see an opportunity for profit. Firms in perfectly competitive markets also produce homogeneous (identical) products. Advertising is not necessary since consumers perceive all products as identical.

​Perfectly Competitive Markets Are Characterized by

Perfectly Competitive Markets Are Characterized by