Under perfect competition
A)information about prices is hard to obtain.
B)there is a maximum number of firms that can enter the market.
C)if a firm exits the market, price will rise.
D)transaction costs are low.

Question

Quizplus · Accepted Answer

Under perfect competition, transaction costs are low because there are no barriers to entry or exit, making it easy for firms to enter or leave the market without incurring significant costs. Additionally, prices are transparent and easily obtainable, making it easy for consumers and producers to make informed decisions. There is also no maximum limit to the number of firms that can enter the market, making it a truly competitive market. If a firm exits the market, the remaining firms will not be affected, and there will be no change in price. Therefore, option A and C are incorrect.

Under Perfect Competition