The Theory of Perfect Competition Is Built on Several Assumptions

question 13

Multiple Choice

The theory of perfect competition is built on several assumptions, including that

• A) the individual firm can influence demand by advertising.
• B) any firm can easily enter or leave the industry.
• C) the individual firm can affect the price of the product it sells.
• D) there are few producers of an identical product.
• E) each firm must earn economic profits to remain in the industry.

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Definitions:

Bourgeoisie

The social class that came to own the means of production during modern capitalism, typically marked by wealth, property ownership, and the ability to employ labour.

Electoral Institutions

Organizations and systems that organize, oversee, and regulate the process of electing representatives in a democracy.

Representative Institutions

Bodies or organizations that are elected or appointed to act on behalf of a larger group of people, such as legislatures or councils.

Enfranchise

To enfranchise is to grant voting rights to an individual or group, thereby providing them the power to participate in choosing their government representatives.