Question

Which of the following best describes pure competition?

Multiple choice question.

An industry involving one large firm producing many products and in which new firms cannot enter or exit the industry very easily.

An industry involving a few firms producing identical products and in which new firms cannot enter or exit the industry very easily.

An industry involving a very large number of firms producing identical products and in which new firms can enter or exit the industry very easily.

An industry involving two firms producing identical products and in which new firms can enter or exit the industry very easily.

Answer 1

Pure competition is an industry involving a large number of firms producing identical products in which new firms can enter or exit easily.

Step-by-step explanation:

Pure competition, also known as perfect competition, is an industry involving a very large number of firms producing identical products and in which new firms can enter or exit the industry very easily.

1. Many firms produce identical products.
2. Many buyers and sellers are available.
3. Buyers and sellers have all relevant information.
4. Firms can enter and leave the market without restriction.

In pure competition, no one firm can influence prices, and each firm's producers can only decide how much to produce.