ACCA BT · Chapter 3 · Question 5 of 11
Which of the following is a characteristic of a perfectly competitive market?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) Each firm is a price taker and sells a homogeneous product
Explanation
In perfect competition there are many buyers and sellers, products are identical, information is perfect and there are no barriers to entry, so each firm must accept the market price. Barriers to entry are associated with monopoly, interdependent pricing among a few large firms describes oligopoly, and branding describes monopolistic competition.
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