The conditions for a perfectly competitive market include which one of the following?
A) Firms can control prices.
B) New entrants cannot threaten the position of existing firms.
C) Firms must employ the newest technologies as soon as they are developed.
D) Firms behave as price takers.
E) Profits are zero in the short run.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, firms act as price takers and do not have the ability to control or influence prices. This is necessary to ensure that competition remains strong and new entrants can easily enter the market without facing barriers to entry. In the short run, profits may not necessarily be zero, but in the long run, they will be driven down to zero due to the ease of entry and exit in the market. The use of the newest technologies is not a necessary condition for a perfectly competitive market.

The Conditions for a Perfectly Competitive Market Include Which One