Which of the following is a characteristic of a perfectly competitive market?

• A. Firms having control over the price of their product
• B. Firms selling differentiated products
• C. Many buyers and sellers, each unable to influence the market price
• D. Significant barriers to entry and exit

Answer: (C)

Verified step by step guidance

1. Understand the definition of a perfectly competitive market: it is a market structure characterized by many buyers and sellers, where no single participant can influence the market price.
2. Recall that in perfect competition, firms are price takers, meaning they have no control over the price and must accept the market price as given.
3. Recognize that products in a perfectly competitive market are homogeneous or identical, not differentiated, so consumers see no difference between products from different firms.
4. Note that there are no significant barriers to entry or exit in a perfectly competitive market, allowing firms to freely enter or leave the market based on profitability.
5. Compare each option to these characteristics to identify the correct one: the characteristic 'Many buyers and sellers, each unable to influence the market price' aligns with perfect competition.