The theory of perfect competition is built on several assumptions,including that
A)the individual firm can affect the price of the product it sells.
B)the individual firm can influence demand by advertising.
C)each firm must earn economic profits to remain in the industry.
D)any firm can easily enter or leave the industry.
E)there are few producers of an identical product.

Question

Quizplus · Accepted Answer

The assumption that any firm can easily enter or leave the industry is a key aspect of perfect competition. This assumption ensures that there are no barriers to entry or exit, which means that firms cannot exert control over the market price, and there is no incentive to earn economic profits. The other options are not part of the assumptions of perfect competition.

The Theory of Perfect Competition Is Built on Several Assumptions,including