Perfect competition exists in an industry that contains many relatively small firms producing identical products with profit- maximising prices equal to the respective marginal costs of products.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, there are many small firms producing identical (homogeneous) products, and firms are price takers, meaning they accept the market price, which equals the marginal cost of production in the long run, ensuring they are maximizing profits by producing where price equals marginal cost.

Perfect Competition Exists in an Industry That Contains Many Relatively