GK
BUSINESS ECONOMICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Which of the following is an assumption of the model of perfect competition?
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Product homogeneity
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No government regulation
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Perfect mobility of factors of production
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All of the above
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Explanation:
Detailed explanation-1: -Many buyers and many sellers is one of the assumption of perfect competition. The price level of the product or service which is sold in the perfectly competitive market remains constant in relative to the level of output. Homogenous products are mainly sold in perfect competion.
Detailed explanation-2: -Perfect competition means that there are many sellers, there is easy entry and exiting of firms, products are identical from one seller to another, and sellers are price takers.
Detailed explanation-3: -All firms sell an identical product (the product is a commodity or homogeneous). All firms are price takers (they cannot influence the market price of their products).
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