Characteristics of a perfectly competitive market include:
A) the absence of transaction costs
B) product homogeneity
C) many sellers, each with a very small market share
D) All of these are characteristics of a perfectly competitive market.

Question

Quizplus · Accepted Answer

All of these characteristics are necessary in a perfectly competitive market. The absence of transaction costs ensures that all buyers and sellers have access to the same information and can easily enter or exit the market. Product homogeneity means that all firms are producing identical products, so consumers can easily compare prices and quality. Finally, many sellers with small market shares ensure that no individual firm can influence the market price.

Characteristics of a Perfectly Competitive Market Include