Which statement best describes the variety of goods found in a perfectly competitive market?

• A. There is a wide variety of goods with significant differences in quality.
• B. Firms offer differentiated products to attract customers.
• C. Goods are unique and branded by each firm.
• D. All firms sell identical or homogeneous products.

Answer: (D)

Verified step by step guidance

1. Understand the key characteristic of a perfectly competitive market: all firms sell identical or homogeneous products.
2. Recall that in perfect competition, products are perfect substitutes, meaning there is no differentiation in quality, branding, or features.
3. Recognize that because products are identical, firms cannot attract customers by differentiating their goods; instead, competition is based solely on price.
4. Contrast this with other market structures like monopolistic competition or monopoly, where product differentiation and branding are common.
5. Conclude that the best description of goods in a perfectly competitive market is that all firms sell identical or homogeneous products.