Which of the following is true? a. The objective of the firm is to maximize profits, by producing the amount that maximizes the difference between its total revenues and total cost. A perfectly competitive market is a market form that has many sellers and consumers. In such a market, the product is completely homogeneous in all the parameters and each party in the transaction has perfect knowledge. Such a market is free from the barriers of trade implying that new firms can freely enter the market and the existing ones can freely exit the market. The price that each firm charges for the homogenous product is determined by the industry and no firm has any control over the market price. A. Firms in the perfect competition produce output with productive efficiency implying that the profit-maximizing output produced by them happens at the minimum point of the long-run average total cost curve. This productive efficiency is possible only in the long run rather than the short run. As such, the stated fact is not a characteristic of the perfectly competitive firm in the short run. This makes the option correct. B. The existence of perfect information among the buyers and sellers is a necessary condition for a market to be classified as perfectly competitive. As such, the stated fact is a characteristic of perfect competition owing to which this option is an incorrect answer choice. C. The existence of numerous sellers ensures that the market share of each firm is negligible and no firm can influence the industry-determined price. As such, each firm is a price taker. Thus, the stated fact in the option represents a characteristic of perfect competition owing to which the option is not a correct answer choice. D. The equilibrium level of output (or say the profit-maximizing output) produced by the firms in perfect competition occurs where price (P) equals marginal cost (MC). Since the firms can sell any quantity at the given market P, the marginal revenue (MR) and the P are the same implying that the MR curve and P line are the same. As such, it can be said that the equilibrium in perfect competition requires the equality of MC and MR. Since the stated fact is a characteristic of the perfect competition, the option is not a correct answer choice Knowledge Booster Learn more about Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below. Recommended textbooks for you  ENGR.ECONOMIC ANALYSIS ISBN:9780190931919 Author:NEWNAN Publisher:Oxford University Press Principles of Economics (12th Edition) ISBN:9780134078779 Author:Karl E. Case, Ray C. Fair, Sharon E. Oster Publisher:PEARSON Engineering Economy (17th Edition) ISBN:9780134870069 Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling Publisher:PEARSON Principles of Economics (MindTap Course List) ISBN:9781305585126 Author:N. Gregory Mankiw Publisher:Cengage Learning Managerial Economics: A Problem Solving Approach ISBN:9781337106665 Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor Publisher:Cengage Learning Managerial Economics & Business Strategy (Mcgraw-... ISBN:9781259290619 Author:Michael Baye, Jeff Prince Publisher:McGraw-Hill Education ENGR.ECONOMIC ANALYSIS ISBN:9780190931919 Author:NEWNAN Publisher:Oxford University Press Principles of Economics (12th Edition) ISBN:9780134078779 Author:Karl E. Case, Ray C. Fair, Sharon E. Oster Publisher:PEARSON Engineering Economy (17th Edition) ISBN:9780134870069 Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling Publisher:PEARSON Principles of Economics (MindTap Course List) ISBN:9781305585126 Author:N. Gregory Mankiw Publisher:Cengage Learning Managerial Economics: A Problem Solving Approach ISBN:9781337106665 Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor Publisher:Cengage Learning Managerial Economics & Business Strategy (Mcgraw-... ISBN:9781259290619 Author:Michael Baye, Jeff Prince Publisher:McGraw-Hill Education What are the characteristics of a perfectly competitive market? A large number of buyers and sellers. ... . Homogenous products. ... . Free exit and entry of firms. ... . Perfect knowledge among buyers and sellers. ... . No transport costs. ... . Perfect mobility of factors of production. ... . No promotional and selling costs.. What are the 5 characteristics of perfect competition?Following are the characteristics of perfect competition:. Large numbers of buyers and sellers in the market.. Free entry and exit of firms in the market.. Each firm should be selling a homogeneous product.. Buyers and sellers should possess complete knowledge of the market.. No price control.. |
What is not a characteristic of a perfectly competitive market?
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