Which of the following best describes perfect competition?

A) 40 firms producing an identical product.
B) All firms earning an economic profit in the long run.
C) Many firms,some large and some small,with perfect knowledge.
D) Hundreds of very small firms,producing an identical product.

Perfect Competition

A market structure characterized by many sellers and buyers, homogeneous products, and free entry and exit, leading to optimal prices.

Identical Product

Goods that are exactly the same in terms of quality, size, and features, making them perfect substitutes for each other.

Economic Profit

The gap between the overall income generated and the sum of all expenses, covering both direct and indirect costs.