Question

Which of the following is a feature of 'Perfect Competition'?

• A. Different prices
• B. Perfect knowledge of the market conditions to buyers and sellers
• C. Existence of advertising cost
• D. All of the above

Answer 1

Answer: (B)

Perfect knowledge of the market conditions to buyers and sellers

Option B states one of the features of perfect competition.

In a perfectly competitive market structure, the buyers have perfect knowledge of the industry and thus the firms do not have to invest in advertising their products, thus eliminating the need for advertising costs.

The firms in perfectly competitive market structure are price takers, thus only one price exists, along with homogeneous products which eliminates the need for advertising.