Firms in Perfectly Competitive Industries Are Unable to Control the Prices

question 13

Multiple Choice

Firms in perfectly competitive industries are unable to control the prices of the products they sell and earn a profit in the long run.Which of the following is one reason for this?

• A)Owners of perfectly competitive firms realize that their short-run profits are temporary. Therefore, they either sell their businesses or develop other products that will earn short-run profits.
• B)Firms in perfectly competitive industries can use advertising in the short run to persuade consumers that their products are better than those of other firms. But eventually consumers realize that all of the firms sell virtually identical products.
• C)Firms from other countries are able to produce similar products at lower costs.
• D)Firms in these industries sell identical products.

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