In a market with perfect competition

Question

Quizplus · Accepted Answer

In a perfectly competitive market, there are many buyers and sellers, and no single seller can influence the market price. Price is determined solely by the forces of supply and demand. Buyers and sellers have perfect knowledge about the price structure of the market, making option A incorrect. Option C, about the number of sellers, is also incorrect. In perfect competition, there are many sellers, and all firms are relatively small (not large), making option D incorrect. Finally, option E is also incorrect as products in a perfectly competitive market are homogeneous, meaning they are identical or nearly identical.

In a Market with Perfect Competition