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7 November, 00:53

A perfectly competitive industry is characterized by:

A. a single firm with control over the market price producing a product with no close substitutes.

B. many firms with no control over the market price producing identical products.

C. a single firm with limited control over the market price producing a product with many close substitutes.

D. many firms with control over the market price producing differentiated products.

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  1. 7 November, 01:15
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    Answer: Option b

    Explanation: Perfect competition refers to a market structure in which there are large number of small sellers selling identical products in the market. Due to large number of participants no individual firm is able to affect prices on the basis of their operations.

    It is not possible earn abnormal profits in such a market structure.

    Hence from the above we can conclude that the correct option is B.
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