Question

Price and output: One of the primary characteristics of perfectly competitive markets is that they are _____. In a perfectly competitive market, price and output reach their ______ levels. Companies do not control prices, ___ and ___ do.

Answer 1

In a perfectly competitive market, firms are price takers and price and output reach their equilibrium levels determined by market demand and supply. Companies do not control prices, the market does.

Step-by-step explanation:

In a perfectly competitive market, firms are price takers, meaning they cannot control prices and must accept the market price for their output. This is because there are many sellers, easy entry and exit of firms, and identical products. Price and output in a perfectly competitive market reach their equilibrium levels, where firms maximize their profits or minimize their losses. Companies do not control prices, the market demand and market supply do.