In perfect competition,which of the following conditions must prevail?
A) All firms must adhere to cost and pricing standards.
B) The number of firms in the industry must be limited.
C) A single firm is able to influence the price of its product.
D) It is relatively difficult to enter the industry.
E) All firms in a given industry must be small.

Question

Quizplus · Accepted Answer

In perfect competition, all firms in a given industry must be small, which means that no single firm has market power to influence the price of the product. Other conditions such as no cost or pricing standards, a large number of firms in the industry, and ease of entry and exit are also necessary for perfect competition, but only E is a unique characteristic of perfect competition.

In Perfect Competition,which of the Following Conditions Must Prevail