Which of the following characteristics apply to a market with perfect and pure competition? A) Freedom to enter and exit the market, firms are price takers, and homogeneous product... Which of the following characteristics apply to a market with perfect and pure competition? A) Freedom to enter and exit the market, firms are price takers, and homogeneous products. B) Firms are price setters, homogeneous products, and freedom to enter and exit the market. C) Easily differentiated products, firms are price setters, and homogeneous products D) Differentiated products, firms are price takers, and barriers for entering and exiting the market.
Understand the Problem
The question is asking to identify which characteristics are applicable to a market that exhibits perfect and pure competition. To answer it, we will evaluate each option against the criteria of perfect competition.
Answer
Freedom to enter and exit the market, firms are price takers, and homogeneous products.
Freedom to enter and exit the market, firms are price takers, and homogeneous products.
Answer for screen readers
Freedom to enter and exit the market, firms are price takers, and homogeneous products.
More Information
In a perfectly competitive market, firms cannot set prices because they are determined by supply and demand forces. Identical products make them indistinguishable across different firms.
Tips
A common mistake is to confuse perfect competition with monopolistic competition, where products are differentiated and firms have some price-setting power.
Sources
- Perfect competition and why it matters (article) | Khan Academy - khanacademy.org
- Perfect Competition: Examples and How It Works - Investopedia - investopedia.com
- Perfect competition - Wikipedia - en.wikipedia.org
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