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JAMB Economics 1984 Question 21

Question 21

Market Structures

An imperfectly competitive market is one where

  1. A.a large number of firms sell homogenous products
  2. B.input and output prices are unaffected
  3. C.each firm faces a horizontal demand curve
  4. D.each firm maximizes profit by selecting an output level at which marginal cost equals market price
  5. E.commodities are differentiated.
Show the answer and explanation

Answer: E (commodities are differentiated.)

Explanation

Differentiated products give firms some control over price, which marks imperfect competition; the other options describe perfect competition.