What are the three conditions for a market to be perfectly competitive? For a ma

Question

What are the three conditions for a market to be perfectly competitive? For a market to be perfectly competitive, there must be OA many buyers and one seller, with the firm producing a product that has no close substitutes, and barriers to new firms entering the market. OB. many buyers and sellers, with firms selling similar but not identical products, with low barriers to new firms entering the market Oc. many buyers and a few sellers, with all firms selling identical products, and no barriers to new firms entering the market. OD. many buyers and sellers, with all firms selling identical products, and no barriers to new firms entering the market. OE. many buyers and a small number of firms that compete, selling differentiated products, and barriers to new firms entering the market

Explanation / Answer

1.

In a perfectly competitive firm –

Hence, the correct option is d.

2.

Price taker is a buyer or seller that is unable to affect the market price and takes the market price as given

ex: seller can sell as much as he wants at market price, but can't sell any at a higher price

Correct option is c.

3.

In a perfectly competitive market prices are determined by the interaction of market demand and market supply.

Hence the correct option is c.

4.

5.

MR=MC and Slope of TR=Slope of TC

Hence correct option is d.

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