Question

A perfectly competitive industry is one that

A. Multiple Choice
B. has commodity product offerings.
C. have difficulty achieving even a temporary competitive advantage.
D. usually exhibits low profitability.
E. All of the answers are correct.

Answer 1

The correct answer to the multiple-choice question is E. All of the answers are correct, as they all describe features of a perfectly competitive industry such as commodity product offerings, difficulty in achieving competitive advantage, and low profitability.

Step-by-step explanation:

A perfectly competitive industry is characterized by easy entry and exit, a multitude of competitors selling commodity products, and the inability for firms to maintain significant competitive advantage due to the homogenous nature of the products. As a result, firms are often price takers and struggle with maintaining high profitability since prices tend toward marginal costs, making low profitability a typical outcome.Multiple firms producing an identical or similar product.Easy entry and exit into the market.

Price-taking behavior, where firms have no control over the market price and must accept it as given.Low profits in the long run, as competition drives prices down.Answering the multiple-choice question, E. All of the answers are correct fits our consideration of the characteristics and implications of a perfectly competitive market structure.