Understanding Perfect Competition Concepts

Which feature best defines a perfectly competitive market?

• One dominant firm
• Few large firms
• Heavy advertising
• Many sellers and buyers

Answer explanation

Explanation for the answer (optional)

In a perfectly competitive market, firms are price takers because...

• They control market price
• Consumers set prices
• Government sets prices
• Market price is determined by supply and demand

Answer explanation

Jupiter is a gas giant made primarily of hydrogen and helium. Unlike terrestrial planets that have solid surfaces, gas giants like Jupiter don't have a well-defined solid surface, allowing them to accumulate more mass in a gaseous form. This composition has allowed Jupiter to grow significantly larger than planets with solid surfaces.

What kind of products are sold in perfect competition?

• Differentiated products
• Unique brands
• Luxury goods
• Identical or standardized products

Which industry is often used as an example of perfect competition?

• Fast food restaurants
• Cell phone companies
• Stock market trading
• Wheat farming

What does 'price taker' mean?

• A firm sets its own price
• A firm raises prices freely
• A firm negotiates prices
• A firm accepts the market price

In perfect competition, what happens if one firm raises its price?

• Consumers still buy from it
• Nothing changes
• Government intervenes
• Consumers buy from other firms

Which of the following is NOT a characteristic of perfect competition?

• Many sellers
• Free entry and exit
• Perfect information
• Product differentiation

What does free entry and exit mean?

• Firms need licenses
• Firms must stay forever
• Only big firms enter
• Firms can easily enter or leave the market

How much control does a perfectly competitive firm have over price?

• Complete control
• Some control
• Government control
• Very little or none

Why is advertising unnecessary in perfect competition?

• It is illegal
• It costs too much
• Consumers ignore ads
• Products are identical