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Economics, Other
Other

Perfectly competitive market & perfect competition


In a perfectly competitive market

a. a firm faces a perfectly elastic demand since there is no restriction of entry and exit
b. if a firm raises its price, it will lose some but not all of its customers
c. when a firm sells another unit of output, the addition to total revenue = the market price
d. all of the above
e. none of the above

Our team believes it is A. but I feel it is D.  because if a firm raises its prices, customers will buy some someone else.  Can you give us your prospective on this?

Also, which is NOT a condition of perfect competition?

a. products made by rival firms are perfect substitutes
b. any individual firm cannot affect market supply
c. unrestricted entry and exit
d. industry sales are small
e. each firm has complete knowledge about production and prices.

I feel the answer is D but the team thinks it is A.  What is your take on this one?

Thank you

By OTA:  Jiong Tu, PhD (IP)

OTA Rating:  4.8/5

Your Price:  $2.19  (original value ~$3.99)

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