Which of the following is unique to perfect competition?
A)The individual firm cannot earn economic profit in the long run.
B)It is easy for new firms to enter the industry.
C)The market demand curve slopes downward.
D)The demand curve facing an individual firm is perfectly elastic.
E)The firms in the industry produce a homogeneous product.

Question

Quizplus · Accepted Answer

In perfect competition, the demand curve facing an individual firm is perfectly elastic, meaning that the firm can sell all of its output at the prevailing market price. This is not true in other market structures, such as monopolistic competition or monopoly. The other options, such as the inability to earn economic profit in the long run and the homogeneous product, can also be present in other market structures.

Which of the Following Is Unique to Perfect Competition