Question

An assumption of the model of perfect competition is:

a. identical goods.
b. difficult entry and exit.
c. few buyers and sellers.
d. cooperation and interdependence between sellers.

Answer 1

Perfect competition assumptions include identical goods, easy entry and exit, many buyers and sellers, and no cooperation or interdependence between sellers.

Step-by-step explanation:

Firms in perfect competition have several assumptions:

1. Identical goods: In perfect competition, all firms produce identical products. This means that consumers cannot differentiate between the products of different sellers.
2. Easy entry and exit: Firms can freely enter and exit the market without any restrictions. There are no barriers to entry or exit.
3. Many buyers and sellers: There are numerous buyers and sellers in the market, preventing any individual firm from having significant control over price or quantity.
4. Cooperation and interdependence between sellers: Perfect competition assumes that there is no cooperation or interdependence between sellers. Each firm acts independently to maximize its own profits.