Which of the following is NOT a characteristic of a perfectly competitive market?

• A. Firms are price takers
• B. Firms can easily enter and exit the market
• C. There are many buyers and sellers
• D. Products are differentiated by brand and quality

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, firms are price takers, free entry and exit in the market, and homogeneous (identical) products.
2. Step 2: Analyze each option given in the problem against these characteristics. For example, 'Firms are price takers' aligns with perfect competition because no single firm can influence the market price.
3. Step 3: Consider 'Firms can easily enter and exit the market' which is also a key feature of perfect competition, ensuring no long-term economic profits.
4. Step 4: 'There are many buyers and sellers' is another hallmark of perfect competition, ensuring no single participant can control the market.
5. Step 5: Identify that 'Products are differentiated by brand and quality' contradicts the perfect competition assumption of homogeneous products, making this the characteristic that is NOT part of a perfectly competitive market.