Perfect competition is a market structure characterized by:
A)product quality differences among large and small firms.
B)free entry and exit.Firms are not restricted from entering or leaving the industry.
C)product quality information that is not known by all buyers and all sellers.
D)ruthless price competition that keeps P

Question

Perfect competition is a market structure characterized by:
A)product quality differences among large and small firms.
B)free entry and exit.Firms are not restricted from entering or leaving the industry.
C)product quality information that is not known by all buyers and all sellers.
D)ruthless price competition that keeps P < AR.

Quizplus · Accepted Answer

Perfect competition is characterized by free entry and exit, meaning that firms are not restricted from entering or leaving the industry. The other options do not accurately describe perfect competition. Perfect competition is characterized by free entry and exit, meaning firms are not restricted from entering or leaving the industry. Product quality differences and information may exist, but they are not defining characteristics of perfect competition. Ruthless price competition that keeps price below the average revenue is a result of the market structure, but not necessarily a defining characteristic.

Perfect Competition Is a Market Structure Characterized By