The correct answer is Option (3) → (A), (C) and (D) only
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(A) Free entry and exit of firms: Correct. This is a key feature of a perfectly competitive market. It allows firms to enter if they see an opportunity for profit and to exit if they incur losses, ensuring that long-run profits are driven to zero.
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(B) Huge selling cost: This is incorrect. Due to the presence of homogenous products and perfect knowledge, firms in a perfectly competitive market do not need to spend money on advertising or selling to differentiate their products.
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(C) perfectly elastic demand curve: Correct. For an individual firm, the demand curve is perfectly elastic. This means the firm can sell any quantity at the market-determined price, but if it raises its price, it will lose all its customers.
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(D) perfect market knowledge among buyers: Correct.Buyers are assumed to have complete information about the prices and quality of the products from all sellers, which contributes to the single, uniform market price.
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