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

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

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, and homogeneous (identical) products.
2. Step 2: Analyze each option given in the problem against these characteristics. For example, 'many buyers and sellers' aligns with perfect competition.
3. Step 3: Recognize that 'firms are price takers' means no single firm can influence the market price, which is true in perfect competition.
4. Step 4: Note that 'free entry and exit' means firms can enter or leave the market without restrictions, another key feature of perfect competition.
5. Step 5: Identify that 'products are differentiated' contradicts the perfect competition assumption because products must be identical or homogeneous, so this is NOT a characteristic of a perfectly competitive market.