Multiple choice

Which of the following is not an essential condition of pure competition?

  1. Large number of buyers and sellers

  2. Homogeneous product

  3. Freedom of entry

  4. Absence of transport cost
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Perfect competition requires: many buyers and sellers, homogeneous products, free entry and exit, perfect information, and perfect mobility of factors. Transportation costs are not essential - models can include or exclude them. In reality, transport costs exist but are small enough not to significantly affect competition. The other three listed conditions are fundamental requirements.

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