Choice "C" is correct. A key assumption of perfect competition is that the firm is a "price taker," that is, it cannot fix the price. Accordingly, it is not true that each firm can price its product above the industry price.Key assumptions of perfect competition include:
a. | Customers are indifferent about which firm they buy from. |
d. | The level of a firm's output is small relative to the industry's total output. |
b. | There is freedom of entry into and exit out of the industry. |
