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By CSS 2025 Economics Past Paper Mcqs CSS 2025 Past Papers Mcqs CSS Economics Past Paper Mcqs CSS Past Papers Mcqs Economics Mcqs No Comments

Which of the following is not a basic assumption of perfect competition?

A. Free entry and exit
B. Many small sellers and buyers
C. Perfect information
D. Homogeneous product

Submitted by: Areesha Khan

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Perfect competition assumes many buyers and sellers, free market entry and exit, and homogeneous products. However, perfect information is a strong assumption, and in real markets, information asymmetry often exists.

Related Mcqs:

  1. Monopolistic competition differs from perfect competition primarily because ?
    A. in monopolistic competition entry into the industry is blocked B. in monopolistic competition there are relatively few barriers to entry. C. in monopolistic competition, firms can differentiate their products D. in perfect competition firms can differentiate their products...
  2. The long-run equilibrium outcomes in monopolistic competition and perfect competition are similar because in both market structures ?
    A. the efficient output level will be produced in the long run B. firms will only earn a normal profit C. firms realize all economies of scale D. firms will be producing at minimum average cost...
  3. The cosmetics industry is not considered by economists to be a good example of perfect competition because ?
    A. there are many EU and government health controls on cosmetic products B. there are a very large number of firms in the industry C. firms spend a large amount of money on advertising D. profit margins are very high for both producers and retailers...
  4. A profit maximizing firm is perfect competition produces where ?
    A. Total revenue is maximized B. Marginal revenue equals zero C. Marginal revenue equals marginal cost D. Marginal revenue equals average cost...
  5. In the long run in perfect competition ?
    A. The price equals the total revenue B. Firms are allocatively inefficient C. Firms are productively efficient D. The price equals total cost...
  6. In the short run firms in perfect competition will still produce provided ?
    A. The price covers average variable cost B. The price covers variable cost C. The price covers average fixed cost D. The price covers fixed costs...
  7. In perfect competition ?
    A. The price equals the marginal revenue B. the price equals the average variable cost C. the fixed cost equals the variable costs D. the price equals the total cost...
  8. In perfect competition ?
    A. The products firm offer is very similar B. Products are heavily differentiated C. A few firms dominate the market D. Consumer have limited information...
  9. In perfect competition ?
    A. Short run abnormal profits are completed away by firms leaving the industry B. Short run abnormal profits are competed away by firms entering the industry C. Short run abnormal profits are competed away by the government D. Short run abnormal profits are competed away by greater advertising...
  10. The theory of the second best suggests that in the absence of perfect competition a privatized industry should charge a price of ?
    A. p = Z B. P = MC + Z C. p = MC D. P = MC – Z...
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The correct answer to the question: "Which of the following is not a basic assumption of perfect competition?" is "Perfect information".

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