Question

Which of the following is not a characteristic of perfect competition?

• A. Large number of firms
• B. Perfect mobility of factors
• C. Informative advertising to ensure that consumers have good information
• D. Freedom of entry and exit into and out of the market

Answer 1

The correct option is C Informative advertising to ensure that consumers have good information

Option C is not a characteristic of perfect competition.

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

Option A,B,D state true and essential characteristics that are necessary to make an industry perfectly competitive.