An industry is said to be perfectly competitive when:
A) demand in the industry is high.
B) each firm has virtually no influence over the price of its product.
C) there are many buyers and sellers, and each is large relative to the total market.
D) supply in the industry is highly elastic.

Question

Quizplus · Accepted Answer

Perfectly competitive industries are characterized by a large number of small firms, homogeneous products, ease of entry/exit, perfect information, and no market power. In such a market structure, each firm is a price taker, meaning that it has no influence over the price of its product and must accept the prevailing market price. Therefore, option B is the correct answer. Options A, C, and D may be present in a perfectly competitive industry, but they are not defining characteristics.

An Industry Is Said to Be Perfectly Competitive When