Question

In a perfectly competitive industry,

A) there are relatively few firms operating in the industry.
B) the products and services sold by firms in the industry are very different from each other.
C) it is very costly for firms to enter the industry.
D) it is not very costly for firms to enter or exit the industry.

Answer 1

In a perfectly competitive industry, it is not very costly for firms to enter or exit the industry, allowing for free and easy entry or exit for businesses, contributing to a high level of competition.

Step-by-step explanation:

In a perfectly competitive industry, the characteristic that best describes the ease of entry or exit is that it is not very costly for firms to enter or exit the industry. This condition promotes a high level of competition, where firms produce identical products, there is a plethora of buyers and sellers in the market, and all have access to relevant information to make informed decisions. Thus, in a perfectly competitive market, firms can enter and exit the market freely, ensuring that no significant barriers or costs prevent new competition from arising or existing businesses from leaving the market when they choose to.