A perfectly competitive market has ________.

• A. significant barriers to entry and exit
• B. firms that can set prices above marginal cost
• C. many buyers and sellers, with no single agent able to influence the market price
• D. products that are highly differentiated

Answer: (C)

Verified step by step guidance

1. Understand the characteristics of a perfectly competitive market. Key features include many buyers and sellers, homogeneous products, free entry and exit, and firms being price takers.
2. Analyze the option 'significant barriers to entry and exit.' In perfect competition, there are no significant barriers, so this option is incorrect.
3. Consider the option 'firms that can set prices above marginal cost.' In perfect competition, firms are price takers and must accept the market price, so they cannot set prices above marginal cost.
4. Evaluate the option 'products that are highly differentiated.' Perfect competition assumes homogeneous (identical) products, so this option is incorrect.
5. Conclude that the correct description is 'many buyers and sellers, with no single agent able to influence the market price,' which aligns with the fundamental assumptions of perfect competition.