Question

Which combination of conditions defines pure competition?

Options

• Homogeneous product, perfect knowledge, no selling cost

• Large number of firms, free entry only, no transport cost

• Large number of buyers and sellers, homogeneous product, free entry and exit

• Free entry and exit, perfect mobility, no government intervention

Answer 1

Large number of buyers and sellers, homogeneous product, free entry and exit

Explanation:

Pure competition is defined by three basic conditions: many buyers and sellers, a homogeneous product, and free entry and exit of firms.