Given the usual assumptions about perfect competition, a perfectly competitive firm
A) can affect the market conditions in a significant way.
B) can set the price it charges.
C) competes actively with other sellers in the industry.
D) can sell as much of its product as it wishes at the market price.
E) is aware of its competitors' costs.

Question

Quizplus · Accepted Answer

In perfect competition, a firm is a price taker, meaning it cannot set the price it charges but instead must accept the market price. The firm also faces many competitors in the industry and cannot significantly affect market conditions. However, it can sell as much of its product as it wishes at the market price, as there are no barriers to entry or exit in perfect competition. The firm does not necessarily have knowledge of its competitors' costs, as this is not a requirement in the assumptions about perfect competition.

Given the Usual Assumptions About Perfect Competition, a Perfectly Competitive