Which of the following is true of the economic model of perfect competition?
A)All the assumptions of a competitive model are satisfied in almost all real-world markets.
B)The efficient outcomes of competitive markets hold only in theory and not empirically.
C)Perfect competition is characterized by its impersonal nature.
D)The outcome of perfect competition is equitable.

Question

Quizplus · Accepted Answer

Perfect competition is characterized by its impersonal nature, meaning that buyers and sellers are price takers and do not have any personal relationships or influence on the market price. However, option A is not true as there are very few real-world markets that satisfy all the assumptions of a perfectly competitive model. Option B is incorrect as the efficient outcomes of competitive markets hold both theoretically and empirically. Option D is also incorrect as perfect competition does not guarantee an equitable outcome as firms with lower costs can eliminate their competitors and gain a dominant position in the market.

Which of the Following Is True of the Economic Model