Which of the following is not a characteristic of firms in a perfectly competiti

Question

Which of the following is not a characteristic of firms in a perfectly competitive market? They sell similar products They each have the ability to set a differentiated price It is relatively easy for them to enter and exit the market All of the above are characteristics of firms in a perfectly competitive market If a competitive firm is currently producing at a level of output at which the marginal revenue of producing the next unit is greater than the marginal cost, then we can say that A firm in a competitive market has the following cost structure:

Explanation / Answer

1.Option B is correct.

Firms in a perfectly competitive market are price takers and not price makers because they all are selling same homogeneous products.

2. Option D is creect.

When the MR exceeds the MC, producing another unit would bring in more revenue than the cost incurred.

3.

Under perfect competition, P = MC.

Option C is correct.

In the short run, P = MC at 4 units of output, producing 5th unit P < MC and hence loss.

output tc mc 0 6 nil 1 11 5 2 16 15 3 20 4 4 25 5 5 32 7

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