ECONOMICS
COMPETITION AND MARKET STRUCTURES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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identical products
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similar, but not identical products
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Either A or B
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None of the above
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Detailed explanation-1: -What Is Perfect Competition? In economic theory, perfect competition occurs when all companies sell identical products, market share does not influence price, companies are able to enter or exit without barriers, buyers have perfect or full information, and companies cannot determine prices.
Detailed explanation-2: -Perfect Competition-Buyers and sellers sell identical products (there is no need for advertising).
Detailed explanation-3: -In a perfectly competitive market: all firms sell an identical product; all firms are price-takers; all firms have a relatively small market share; buyers know the nature of the product being sold and the prices charged by each firm; the industry is characterized by freedom of entry and exit.
Detailed explanation-4: -The three primary characteristics of perfect competition are (1) no company holds a substantial market share, (2) the industry output is standardized, and (3) there is freedom of entry and exit.
Detailed explanation-5: -MONOPOLISTIC COMPETITION-is the market structure that has all the conditions of a perfect competition EXCEPT for identical products.