Question

What are the likely reason(s) that the market for electricity is not perfectly competitive? Please select all that apply.

Instructions: You must make a selection for each option. Click once to place a check mark for correct answers and click twice to empty the box for wrong answers.
A. There are few buyers in the market.checked
B. Electricity is not a standardized (homogeneous) product.unanswered
C. It is difficult to enter or exit the industry as a supplier.checked
D. There are few sellers in the market.checked

Answer 1

The correct answer is option C and D.

Step-by-step explanation:

A perfectly competitive firm has a large number of buyers and sellers. These sellers produce homogenous products. There is no restriction on entry and exit in the market. The firms are price takers.

The market for electricity is not a competitive market because there are few sellers in the market and there is difficulty in entry and exit because of the high cost involved.