Question

Relative to other market structures, perfectly competitive markets have which of the following properties? Correct Answer(s)

Firms are very large relative to the market.

Entering and exiting the market are relatively easy.

Firms are price takers, or they have no control over price.

Firms produce differentiated products.

Firms produce similar or standardized products.

Firms have significant price control.

Answer 1

Answer:

Explanation:

Firms are very large relative to the market- INCORRECT, this is a feature of Monopoly market.

Entering and exiting the market are relatively easy - CORRECT, new firms can freely enter the industry or in the long run, an existing firm can freely leave the industry.

Firms are price takers, or they have no control over price- CORRECT ,a single firm in a perfectly competitive market cannot influence the market price through its own independent action. Each firm sells its products at an existing market price.

Firms produce differentiated products- INCORRECT, this is a feature of an Oligopoly market.

Firms produce similar or standardized products- CORRECT, all products are homogeneous.

Firms have significant price control-INCORRECT, this is a feature of Monopoly market.