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Question
Microeconomics
Posted 7 months ago
All of the following are characteristics of perfectly competitive markets EXCEPT
Choose 1 answer:
(A) perfect information
B many sellers
(C) barriers to entry
D) identical goods
(E) many buyers
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Answer from Sia
Posted 7 months ago
Solution
a
Perfect Information: In a perfectly competitive market, all participants have complete and instantaneous knowledge about prices and products
b
Many Sellers: There are numerous sellers in the market, each of whom is small relative to the market and cannot influence the market price
c
Barriers to Entry: In a perfectly competitive market, there are no barriers to entry or exit, allowing firms to freely enter or leave the market
d
Identical Goods: The products offered by different sellers are homogeneous and indistinguishable from one another
e
Many Buyers: There are many buyers in the market, each of whom is small relative to the market and cannot influence the market price
Answer
(C) barriers to entry
Key Concept
Barriers to entry are not a characteristic of perfectly competitive markets.
Explanation
In a perfectly competitive market, there are no barriers to entry or exit, which allows firms to freely enter or leave the market. This ensures that the market remains competitive and that no single firm can dominate the market.
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