A market is considered perfectly competitive if:
I. there is a lot of product differentiation among sellers.
II. there are many sellers, each small relative to the total market.
III. the product sold is similar across sellers.
IV. there are only a few buyers.
A) I and II only
B) I, II, and III only
C) II and III only
D) II, III, and IV only

Question

Quizplus · Accepted Answer

Perfectly competitive markets have many small sellers, each selling a similar product. There is no product differentiation and multiple buyers. Therefore, options I and IV are incorrect, and option III is correct. Option II states that there are many small sellers, which is correct and necessary for a perfectly competitive market. Therefore, the correct answer is C, II and III only.

A Market Is Considered Perfectly Competitive If