CFA Practice Question
A market exhibiting signs of perfect competition is characterized by:
A. A large number of firms producing identical products with low barriers to entry.
B. A large number of firms producing identical products with high barriers to entry.
C. A small number of firms producing identical products with high barriers to entry.
Explanation: Perfect competition: large number of firms, identical products, no barriers to entry/exit.
User Contributed Comments 4
| User | Comment |
|---|---|
| OmarDK | How can output expand in the short run if we are already at full employment? |
| nike | by working overtime, etc. however the output expansion cannot be sustained. |
| sarath | adaptive mean non-anticipated ....implies that people will take time to react and eventually adapt... |
| cwest020 | full employment means 95% not 100, so output can still increase in the short run |