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This Question: 2 pts 1 of 25 (1 complete) | > | This Quiz: 40 pts possibl Select which characteristic of a perfectly competitive industry is not met in the examples below Four fundamental characteristics of a perfectly competitive industry (1) there is a large number of buyers and sellers, (2) firms in the industry produce and sell a homogeneous product (3) information is equally accessible to both buyers and sellers, and (4) there are insignificant barriers to industry entry or exit. Even though one firm produces a large portion of the industry's total output, there are many firms in the industry, and their products are indistinguishable. Firms can easily exit and enter the industry. This example violates characteristic number There are many buyers and sellers in the industry. Consumers have equal information about the prices of firms' products, which differ slightly in quality from firm to firm. This example violates characteristic number Many taxicabs compete in a city. The city's government requires all taxicabs to provide identical service. Taxicabs are virtually identical, and all drivers must wear a designated uniform. The government also limits the number of taxicab companies that can operate within the city's boundaries. This example violates characteristic number Enter your answer in each of the answer boxes. OType here to search Esc -1 F2 F3 F4 FS F6

Explanation / Answer

The first statement violates the characteristic according to which there is a large number of buyers and sellers. This is because according to the statement one firm in the industry produces a large portion of the industry’s output.

The second statement violates the characteristic according to which firms in the industry produce and sell a homogenous product. This is because according to the statement the products of firms differ in quality.

The third statement violates the characteristic according to which there are insignificant barriers to industry entry or exit. This is because according to the statement the government limits the number of taxicab companies that can operate within the city.

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