Economics: Perfect competition
EasyIf a market for a specific good is described as perfectly competitive, which of the following statements is true or false?
- a)Every firm in the market offers a unique version of the good.
In perfect competition all firms sell an identical (homogeneous) good.
- b)Every firm in this market consistently makes significant profits.
Profits are not guaranteed. In the long run they are driven to zero.
- c)The market price is consistently above the marginal cost of production.
Firms produce where price equals marginal cost.
- d)There are no obstacles for firms to enter or leave the market.
Free market entry and exit is one of the defining features.
- e)The market consists of a few firms, all of which charge the same price.
Perfect competition requires many firms, not a few.


