In a perfectly competitive market, which of the following characteristics is true?

In a perfectly competitive market, many small firms sell identical products, meaning no single firm can control the market price. This competition helps keep prices fair and low for consumers because if one company tries to raise prices, customers can easily switch to another seller offering the same product. Additionally, there are no barriers to entering or exiting the market, so new firms can join whenever they see a profit opportunity, which encourages innovation and keeps the market dynamic. For example, if a local bakery starts selling a popular type of bread, other bakers can quickly begin offering that same bread to attract customers, ensuring no one bakery can dominate the market. This structure leads to an efficient allocation of resources, as firms must constantly improve to stay competitive.