In part, perfect competition arises if i. each firm's minimum efficient scale is large relative to demand.
Ii. each firm produces a good or service identical to those produced by its many competitors.
Iii. there are significant barriers to entry.

Question

Quizplus · Accepted Answer

Perfect competition arises when each firm produces a good or service identical to those produced by its many competitors. The other two conditions listed, i.e., large minimum efficient scale relative to demand and significant barriers to entry, are actually characteristics of monopolies or oligopolies. Thus, the answer is ii only.

In Part, Perfect Competition Arises If I