Which characteristic is NOT associated with perfectly competitive firms?

In a perfectly competitive market, firms are characterized by the inability to influence market prices, which is a key principle of this market structure. They are price takers; this means that individual firms must accept the market price determined by the overall supply and demand.

The concept of perfect knowledge implies that all participants in the market, both buyers and sellers, are well-informed about prices, products, and technology. This transparency allows for efficient resource allocation.

The presence of a large number of buyers and sellers ensures that no single entity can dominate the market or set prices. Each firm produces a homogeneous product, leading to perfect substitutability among them.

Freedom of entry and exit ensures that firms can enter the market when there are profits to be made and exit when they cannot cover their costs. This dynamic keeps the market competitive and responsive to changes in demand and supply.

Therefore, the ability to set prices above market levels is not a characteristic of perfectly competitive firms. This inability to influence prices is fundamental to maintaining the conditions of perfect competition.