Question

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

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

Answer 1

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

Option B is correct:

Since the product is homogeneous and the consumers have perfect knowledge of the industry there is no need for advertising.

All other options are the incorrect answer as they state true characteristics of perfect competition.