Multiple Choice
In a perfectly competitive market, which of the following is considered the most efficient method of production?
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3. The Market Forces of Supply and Demand
Competitive Markets
Multiple Choice
Which of the following is a characteristic of a purely competitive market?
A
Firms have significant control over market price.
B
Products are highly differentiated.
C
Firms sell identical products.
D
There are significant barriers to entry.
Verified step by step guidance1
Understand the concept of a purely competitive market, also known as perfect competition, where many firms sell identical products and no single firm can influence the market price.
Recall that in a purely competitive market, firms are price takers, meaning they have no control over the market price because the products are perfect substitutes.
Recognize that product differentiation is minimal or nonexistent in perfect competition; all firms sell identical or homogeneous products.
Note that barriers to entry are low or nonexistent in purely competitive markets, allowing new firms to enter freely and compete.
Conclude that the key characteristic among the options given is that firms sell identical products, which aligns with the definition of a purely competitive market.
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