Perfect competition differs from imperfect competition in that:
A)it does not maximize profits at the point where marginal revenue equals marginal cost.
B)perfect competition's industry demand curve never slopes down.
C)perfect competition lacks any externalities.
D)perfectly competitive firms cannot affect prices.
E)none of the above accurately describe a difference.

Question

Quizplus · Accepted Answer

In perfect competition, each firm is a price taker and cannot affect market prices. In contrast, imperfect competition includes monopolistic competition, oligopoly, and monopoly, all of which have some degree of market power, allowing them to affect prices. The other options listed are not accurate differences between perfect and imperfect competition.

Perfect Competition Differs from Imperfect Competition in That