All of the following are characteristics of perfect competition except:

• A. Products are differentiated
• B. There are many buyers and sellers
• C. Firms are price takers
• D. There is free entry and exit in the market

Answer: (A)

Verified step by step guidance

1. Understand the defining characteristics of a perfectly competitive market. These typically include: many buyers and sellers, identical (homogeneous) products, firms being price takers, and free entry and exit in the market.
2. Analyze each option given in the problem to see if it matches these characteristics:
3. Check if 'Products are differentiated' fits the perfect competition model. In perfect competition, products are identical, not differentiated.
4. Verify that 'There are many buyers and sellers' is a characteristic of perfect competition, which it is.
5. Confirm that 'Firms are price takers' and 'There is free entry and exit in the market' are also true characteristics of perfect competition.
6. Conclude that the option 'Products are differentiated' is the exception because product differentiation is a feature of imperfect competition, not perfect competition.