ECON 211 Chapter 23 Characteristics of a Perfectly Competitive Market Structure Questions

For each example​ below, identify which statement is not characteristic of a perfectly competitive industry.

The government also limits the number of taxicab companies that can operate within the​ city's boundaries.

For each example​ below, identify which statement is not characteristic of a perfectly competitive industry.

One firm produces a large portion of the​ industry's total output.

Firms in perfectly competitive industries will eventually have no customers if they set their prices above the competitive price.

TRUE

In perfectly competitive​ markets, there are LARGE numbers of well-informed BUYERS and sellers.

TRUE

Perfectly competitive firms sell HOMOGENEOUS products and can EASILY exit or enter the industry.

TRUE

A perfectly competitive firm wants higher profits and has decided to raise the price of its product. As an economic consultant you would advise them to

not do this since they would lose all of their sales to competitors.

All of the following are characteristics of perfect competition except

the products sold by the firms in the industry are differentiated.

Which of the following is not one of the assumptions of a perfectly competitive​ market?

Better information for producers than consumers.

For each example​ below, identify which statement is not characteristic of a perfectly competitive industry.

The products differ slightly in quality from firm to firm

The perfectly competitive firm is said to be

a price taker— it takes the price given by the market.

Select which characteristic of a perfectly competitive industry is not met in the examples below. Four fundamental characteristics of a perfectly competitive​ industry: ​(1) there is a large number of buyers and​ sellers, ​(2) firms in the industry produce and sell a homogeneous​ product, ​(3) information is equally accessible to both buyers and​ sellers, and ​(4) there are insignificant barriers to industry entry or exit. Many taxicabs compete in a city. The​ city's government requires all taxicabs to provide identical service (2). Taxicabs are virtually​ identical, and all drivers must wear a designated uniform. The government also limits the number of taxicab companies that can operate within the​ city's boundaries (4). This example violates characteristic

number FOUR-4

Select which characteristic of a perfectly competitive industry is not met in the examples below. Four fundamental characteristics of a perfectly competitive​ industry: ​(1) there is a large number of buyers and​ sellers, ​(2) firms in the industry produce and sell a homogeneous​ product, ​(3) information is equally accessible to both buyers and​ sellers, and ​(4) there are insignificant barriers to industry entry or exit. Even though one firm produces a large portion of the​ industry's total​ output (1), there are many firms in the​ industry, and their products are indistinguishable (2). Firms can easily exit and enter the industry (4). This example violates characteristic

number ONE-1.

Select which characteristic of a perfectly competitive industry is not met in the examples below. Four fundamental characteristics of a perfectly competitive​ industry: ​(1) there is a large number of buyers and​ sellers, ​(2) firms in the industry produce and sell a homogeneous​ product, ​(3) information is equally accessible to both buyers and​ sellers, and ​(4) there are insignificant barriers to industry entry or exit. There are many buyers and sellers in the industry (1). Consumers have equal information about the prices of​ firms' products (3), which differ slightly in quality from firm to firm (2). This example violates characteristic

number TWO-2