Question
Which of the following statements are true regarding the
Perfect Competition market structure? 1. All firms in a perfectly competitive market sell identical products. 2. Firms in a perfectly competitive market have control over prices. 3. There is free entry and exit in a perfectly competitive market. 4. In the long run, firms in a perfectly competitive market earn normal profits. Select the correct answer using the code below:Solution
• Statement 1 is correct as firms in a perfectly competitive market sell identical products. • Statement 2 is incorrect because firms in perfect competition are price takers and do not have control over the market price. • Statement 3 is correct because in perfect competition, there are no barriers to entry or exit, allowing firms to freely enter or leave the market. • Statement 4 is correct because in the long run, firms in perfect competition earn normal profits, as the entry of new firms drives economic profits to zero.
Select the most appropriate meaning of the given idiom.
Fight tooth and nail
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HEAD AND SHOULDERS ABOVE
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Word of mouth
A penny for your thoughts
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