Which of the following is not a feature of perfect competition?

The correct answer is Option (2) → The product of one firm can be differentiated from the product of other firms.

• In perfect competition, all firms sell homogeneous (identical) products. There is no product differentiation — buyers treat all products as perfect substitutes.

• The other features listed are true characteristics of perfect competition:

  • There are many buyers and sellers.

  • Free entry and exit ensure firms earn only normal profit in the long run.

  • There is perfect information among buyers and sellers about prices and products.