In a perfectly competitive industry,
A) there are relatively few firms operating in the industry.
B) the products and services sold by firms in the industry are very different from each other.
C) it is very costly for firms to enter the industry.
D) it is not very costly for firms to exit the industry.

Question

Quizplus · Accepted Answer

In a perfectly competitive industry, there are many small firms operating and the products and services sold by them are homogeneous. As a result, it is relatively easy for firms to enter the industry and start producing the same goods or services. Similarly, if firms are not making profits, they can easily exit the industry without incurring high costs. Therefore, option D is the correct choice.

In a Perfectly Competitive Industry