Question

In a perfectly competitive market, all producers sellidentical goods or services. Additionally, there arefew buyers and sellers. Because of these two characteristics, both buyers and sellers in perfectly competitive markets are pricetakers . True or False: The market for lettuce exhibits the two primary characteristics that define perfectly competitive markets.

Answer 1

Answer:

false

Explanation:

A perfect competition is characterized by many buyers and sellers of homogenous goods and services. Market prices are set by the forces of demand and supply. There are no barriers to entry or exit of firms into the industry.  

In the long run, firms earn zero economic profit.  If in the short run firms are earning economic profit, in the long run firms would enter into the industry. This would drive economic profit to zero.  

Also, if in the short run, firms are earning economic loss, in the long run, firms would exit the industry until economic profit falls to zero.  

While the market for lettuce sells identical items, there are many buyers and sellers