Which of the following is true regarding perfect competition? I. The firms are price takers.
II) Marginal revenue equals the price of the product.
III) Established firms have no advantage over new firms.

Question

Quizplus · Accepted Answer

In perfect competition, all firms are price takers, meaning they have no control over the price of the product and must accept the market price. This makes statement I true. 
Since all firms sell the identical product, the market demand curve is perfectly elastic and the price remains constant. This means that marginal revenue is equal to the price of the product, making statement II true. 
Finally, in perfect competition, established firms have no advantage over new firms as there are no barriers to entry, and all firms have access to the same technology and resources. This makes statement III true. Therefore, all three statements are true in perfect competition.

Which of the Following Is True Regarding Perfect Competition? I