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 a perfectly competitive market, firms are price takers because the market determines the price. Marginal revenue equals the price because each additional unit sold at the market price adds exactly that amount to total revenue. Established firms have no significant advantage over new firms in terms of technology or cost, making entry and exit relatively easy.

Which of the Following Is True Regarding Perfect Competition