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Which of the following is NOT a characteristic of perfect competition?

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Which of the following is NOT a characteristic of perfect competition?
  • AFree entry and exit of the firms
  • BThe demand curve of firm is horizontal
  • CThe marginal revenue curve is horizontal
  • DAn individual firm can influence the price
Correct answer: D
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An individual firm can influence the price

An individual firm can influence the price is not a characteristic of perfect competition. All goods in a perfectly competitive market are considered perfect substitutes, and the demand curve is perfectly elastic for each of the small, individual firms that participate in the market. These firms are price takers–if one firm tries to raise its price, there would be no demand for that firm's product.