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CUET Economics 2025 PYQs13 May Shift 2. Free, no login required.

Micro

past year questions, CUET Economics 2025 13 May Shift 2

Forms of Market

past year questions, Micro, CUET Economics 2025 13 May Shift 2

Medium

What are the key components of a perfectly competitive market?

(A) Large number of buyers and sellers.

(B) Homogeneous product.

(C) Free Entry and exit.

(D) Asymmetric Information.

Choose the correct answer from the options given below:

Solution

✅ Correct Option: 2

Option 1 -> Includes asymmetric information (D), which is NOT a characteristic of perfect competition.

Option 2 -> Correctly identifies large number of buyers and sellers (A), homogeneous product (B), and free entry and exit (C) as key components.

Option 3 -> Incorrectly includes asymmetric information (D), which contradicts perfect competition requirements.

Option 4 -> Excludes large number of buyers and sellers (A) and incorrectly includes asymmetric information (D).

Hence, Option 2: (A), (B) and (C) only -> A perfectly competitive market requires: (A) Large number of buyers and sellers ensuring no single entity can influence price, (B) Homogeneous products making all units perfectly substitutable, and (C) Free entry and exit allowing firms to respond to profit opportunities. Note that perfect competition requires PERFECT INFORMATION, not asymmetric information. Asymmetric information is a market imperfection, not a characteristic of perfect competition. Therefore, (D) is incorrect. -> correct

Related questions:

2025: 29 May Shift 1

Which of the following are features of the perfect competition market?

(A) Price taking behavior of firms.

(B) Restriction on entry and exit of firms.

(C) Large number of sellers and buyers.

(D) Asymmetric Information.

Choose the correct answer from the options given below:

2025: 27 May Shift 2

For a price-taking firm, the market price is equal to marginal revenue and ......

2025: 16 May Shift 1

Identify the correct sequence due to which firms under perfect competition earn normal profits in the long run.

(A) The firms are earning less than normal profit at the prevailing price.

(B) The profits of each firm will increase to the level of normal profit.

(C) No more firm will want to leave, since they will be earning normal profit here.

(D) Some firms will exit, which will lead to an increase in price.

Choose the correct answer from the options given below:

2026: 20 May Shift 1

Identify the correct statements from the following in the context of normal profit and break-even point (BEP).

(A) BEP is the point at which a firm earns only normal profit.

(B) A perfectly competitive firm earns normal profit in long run.

(C) Profit level that keeps a firm in the existing business is called super-normal profit.

(D) Profit level that keeps a firm in the existing business is called normal profit.

Choose the correct answer from the options given below:

2025: 2 June Shift 1

Match List-I with List-II

List-IList-II
(A) Perfect Competition(I) A typical characteristic of perfect competition.
(B) Perfectly elastic demand curve(II) An individual firm is a price taker.
(C) Degree of price control under perfect competition(III) The firm can sell any amount of its output at the prevailing price.
(D) Freedom of entry and exit(IV) No control over price.

Choose the correct answer from the options given below:

2026: 11 May Shift 1

Which of the following condition must be satisfied for profit maximization under perfect competition for the Short Run (SR) and for the Long Run (LR) respectively?

Where P = Price, AVC = Average variable cost, AFC = Average fixed cost, AC = Average cost.

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