Which of the following is NOT a condition for perfect competition?

• A. Firms can freely enter and exit the market
• B. There are many buyers and sellers
• C. Products are homogeneous
• D. Firms have significant control over market price

Answer: (D)

Verified step by step guidance

1. Step 1: Understand the characteristics of a perfectly competitive market. These typically include: many buyers and sellers, homogeneous products, free entry and exit of firms, and firms being price takers (i.e., no control over market price).
2. Step 2: Analyze each option given in the problem to see if it matches these characteristics.
3. Step 3: Recognize that 'Firms can freely enter and exit the market' is a condition for perfect competition because it ensures no long-term economic profits.
4. Step 4: Note that 'There are many buyers and sellers' is essential to prevent any single participant from influencing the market price.
5. Step 5: Understand that 'Products are homogeneous' means all firms sell identical products, so consumers have no preference based on the seller, reinforcing price-taking behavior. Therefore, the statement 'Firms have significant control over market price' contradicts the price-taking condition and is NOT a condition for perfect competition.