Question

Which of the following is/are the features of perfect competition ?
(i) Large number of buyers and sellers
(ii) Identical product
(iii) Free entry and exit
(iv) No transportation cost

• A. i, ii and iii
• B. ii, iii and iv
• C. i, ii, and iv
• D. i, ii, iii and iv

Answer 1

The correct option is A i, ii and iii

Options A is the correct answer:

Only point (iv) is incorrect, as transport costs may or may not exist in perfectly competitive market structure. It is up to the individual firms and their supply chain policies, it is not necessary for transport costs to be absent for the firm to be operating in a perfectly competitive market structure.

All other points state true and essential characteristics that are necessary to make an industry perfectly competitive.