Question:

Economics - Perfectly Competitive Firm?

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A perfectly competitive firm has no control over price because

the government imposes price ceilings on the products produced in perfectly competitive markets

there is free entry and exit from the industry

every firm’s product is a perfect substitute for every other firm’s product and no firm is large enough to impact the market supply curve

the market demand for goods produced in perfectly competitive industries is perfectly elastic

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2 ANSWERS


  1. the market demand for goods produced in perfectly competitive industries is perfectly elastic - this is given by definition of perfect competition.

    Though

    "every firm’s product is a perfect substitute for every other firm’s product and no firm is large enough to impact the market supply curve" is true too.


  2. a combination of the middle two answers

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