Question

What conditions make a market perfectly​ competitive? A market is perfectly competitive if A. it has many buyers and one​ firm, which produces a product with no close​ substitutes, with barriers to new firms entering the market. B. it has many buyers and a few​ sellers, all of whom are selling differentiated ​products, with no barriers to new firms entering the market. C. it has many buyers and a few​ sellers, all of whom are selling identical ​products, with barriers to new firms entering the market. D. it has many buyers and many​ sellers, all of whom are selling identical​ products, with no barriers to new firms entering the market. E. it has many buyers and many​ sellers, all of whom are selling differentiated​ products, with no barriers to new firms entering the market.

Answer 1

Answer:

E. It has many buyers and many sellers , all of whom are selling differentiated products , with no barriers to new firms entering the market.

Explanation:

A perfect market is a market where there are large number of buyers such that all participants are price takers hence cannot influence the price of commodities sold in such market.

In a perfect market, there are no barriers to entry and exit. This also means that new firms can enter the market. Here, the buyers are free to buy from any person and the sellers are free to sell to anyone. Differentiated products are also sold there.