Question

List three conditions for perfect competition.Instructions: You may select more than one answer.1. There is only one firm that makes up the entire market.2. There are high barriers to entry.3. Firms’ products are differentiated.4. There are no barriers to entry.5. Both buyers and sellers are price takers.6. Firms engage in strategic decision making.7. Firms’ products are identical.

Answer 1

Answer:

4. There are no barriers to entry.

5. Both buyers and sellers are price takers.

7. Firms’ products are identical.

Explanation:

Perfect.competitionnis one in which the lead of demand and supply apply effectively. In this type of competition no one company has monopoly of supply. Instead there are many firms that sell identical products.

These firms need to compete to gain market share. They do this through advertising and trying to differentiate their products from others.

Buyers and sellers are price takers, meaning both of them cannot influence the price of products in the market by their transactions.

Because of the lack of monopoly in this market there are no barriers to entry.

Answer 2

Answer:

There are no barriers to entry.

5. Both buyers and sellers are price takers

.7. Firms’ products are identical.

Explanation:

A perfect competition is characterised 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.

A monopoly is when there's only one firm operating in an industry.

I hope my answer helps you