One of the characteristics of the perfectly competitive market is:
A) a small number of large firms.
B) firms that sell a heterogeneous product.
C) sellers and buyers both can increase the price on the market.
D) there is a large number of small firms.

Question

Quizplus · Accepted Answer

One of the characteristics of a perfectly competitive market is a large number of small firms, where no single firm has control over the market price. This is because in a perfectly competitive market, there are many buyers and sellers offering similar products, giving consumers many options to choose from. Therefore, a small number of large firms (A) would not fit this description, as it would create the potential for market power and influence. Additionally, firms in a perfectly competitive market typically sell homogeneous products (B), meaning they are identical and interchangeable, further emphasizing the focus on price competition. Lastly, neither buyers nor sellers in a perfectly competitive market have the power to increase prices (C), as the market price is determined by supply and demand forces.

One of the Characteristics of the Perfectly Competitive Market Is