Question

A perfectly competitive market is a market that meets the conditions of
A. ​(1) many buyers and​ sellers, (2) all firms selling identical​ products, and​ (3) significant barriers to new firms entering the market.
B. ​(1) many buyers and​ sellers, (2) all firms selling identical​ products, and​ (3) no barriers to new firms entering the market.
C. ​(1) many buyers and​ sellers, (2) all firms selling differentiated​ products, and​ (3) no barriers to new firms entering the market.
D. ​(1) few buyers and​ sellers, (2) all firms selling identical​ products, and​ (3) no barriers to new firms entering the market.

Answer 1

Answer: Option (B) is correct.

Explanation:

Perfect competition market structure is one under which there tends to be several firms, none of which are large enough in order to influence the industry,also all of them produce homogeneous products and services. These firms are known as the price takers. There exist no such barriers to entry or exit in this market.