Discussion
Which of the following refers to Perfect Competition ?
(i) There are restrictions on buyers and sellers
(ii) There are no restrictions on movement of goods
(iii) There are no restrictions on factors of production
Correct one is
Answer: B
Perfect competition is marked by no restrictions on the movement of goods and none on the factors of production, so (B), only (ii) and (iii), is correct. Buyers and sellers are free to enter and leave the market, goods move freely so that one price rules, and labour and capital are mobile. Statement (i), that there are restrictions on buyers and sellers, is the opposite of perfect competition because it describes a market in which entry is controlled. Options (A), (C) and (D) all include (i), so each contains a statement that is false.
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