Final answer:
A perfectly competitive market is characterized by a large number of buyers and sellers, homogenous products, ease of entry and exit, perfect information, and price takers. In the short run, perfectly competitive firms can only adjust their level of production to maximize profits.
Step-by-step explanation:
A perfectly competitive market is characterized by a large number of buyers and sellers, homogenous products, ease of entry and exit, perfect information, and price takers. In the short run, perfectly competitive firms can only adjust their level of production to maximize profits. They will continue producing as long as the price is equal to or greater than average variable cost. In the long run, firms can also enter or exit the market based on the profitability of the industry as a whole.