Ace Your 2026 SQA National 5 Economics Exam – Unleash Your Inner Economist!

A perfectly competitive market is characterized by low barriers to entry, which allows new firms to enter the market relatively easily without facing significant obstacles. This characteristic is essential because it ensures that the market remains competitive, as existing firms cannot restrict entry to maintain higher prices or profits for an extended period. In such a market, if a firm is making substantial profits, new companies will be attracted to the market, leading to increased supply and eventually driving prices down to a level where only normal profits are made.

On the other hand, unique products would indicate product differentiation, which is not a feature of perfect competition, as firms sell identical products. The presence of one dominant seller suggests a monopoly or oligopoly rather than perfect competition, as in a perfectly competitive market, no single firm has significant market power. Limited information access would hinder the ability of consumers and producers to make informed decisions, which contradicts the idea of perfect competition, where all participants have access to complete and accurate information about prices and products.