1. Which of the following is NOT a characteristic of a perfectly competitive market? a. Goods offered for sale are individual unique c. Firms are free to enter and free to leave the market b. Goods offered for sale are essentially identical d. Firms are price takers since there are many sellers in the market Hint: The three important characteristics of a perfectly competitive market include (i) there are many buyers and sellers (which means an individual buyer is a price taker and an individual seller/producer is a price taker), (ii) every producer/firm sell a resemble/identical product, and (iii) free enter and free exit (which means if the competitive market realizes a positive profit, a new firm is able to enter freely without any fee nor any barrier. Oppositely, if any existing competitive firm earns a negative profit, it is allowed to leave the market freely without any fee nor any barrier).

1. Which of the following is NOT a characteristic of a perfectly competitive market? a. Goods offered for sale are individual unique c. Firms are free to enter and free to leave the market b. Goods offered for sale are essentially identical d. Firms are price takers since there are many sellers in the market Hint: The three important characteristics of a perfectly competitive market include (i) there are many buyers and sellers (which means an individual buyer is a price taker and an individual seller/producer is a price taker), (ii) every producer/firm sell a resemble/identical product, and (iii) free enter and free exit (which means if the competitive market realizes a positive profit, a new firm is able to enter freely without any fee nor any barrier. Oppositely, if any existing competitive firm earns a negative profit, it is allowed to leave the market freely without any fee nor any barrier).

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter13: Firms In Competitive Markets

Section: Chapter Questions

Problem 1QR

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Concept explainers

Productive and Allocative Efficiency Analysis

Productive efficiency, also referred to as production efficiency is a term in economics describing the level at which a company is operating at its maximum capacity. Beyond this point, the entity will be unable to manufacture any additional goods without cutting down another product’s production level. This occurrence is an outcome of production happening alongside a Production Possibility Frontier (PPF).

Question

1. Which of the following is NOT a characteristic of a perfectly competitive market?
a. Goods offered for sale are individual unique
c. Firms are free to enter and free to leave the market
b. Goods offered for sale are essentially identical
d. Firms are price takers since there are many sellers in the market
Hint: The three important characteristics of a perfectly competitive market include (i) there are many
buyers and sellers (which means an individual buyer is a price taker and an individual seller/producer is a
price taker), (ii) every producer/firm sell a resemble/identical product, and (iii) free enter and free exit
(which means if the competitive market realizes a positive profit, a new firm is able to enter freely
without any fee nor any barrier. Oppositely, if any existing competitive firm earns a negative profit, it is
allowed to leave the market freely without any fee nor any barrier).

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