Which of the Following Is True of Perfect Competition

question 48

Multiple Choice

Which of the following is true of perfect competition?

• A)Since a perfectly competitive firm can sell all it wants at the market price, the firm's demand curve is vertical at the market price over the entire range of output that it could possibly produce.
• B)Because perfectly competitive markets have many buyers and sellers, each firm is so small in relation to the industry that its production decisions have no impact on the market price.
• C)Since perfectly competitive markets are highly competitive, entering a market is very difficult.
• D)Since there are large number of sellers in a perfectly competitive market, slightly differentiated products are considered identical.
• E)Since all the products in a perfectly competitive market are identical, sellers can change the price of their product, but not the quantity supplied.

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Definitions:

Goods In Transit

Items that have been shipped by a seller but not yet received by the buyer, existing in a limbo state on the balance sheet until delivery.

Functional Currency

The primary currency of the primary economic environment in which an entity operates, used in its financial reporting.

Subsidiary

A company controlled by another company, known as the parent company, through the ownership of more than half of its voting stock.