Multiple Choice QuestionWhat type of market is described by a constant product price and a downward sloping resource demand curve caused by a decline in marginal product?Multiple choice question.pure competitionmonopolyoligopolymonopolistic competition
Question
Multiple Choice QuestionWhat type of market is described by a constant product price and a downward sloping resource demand curve caused by a decline in marginal product?Multiple choice question.pure competitionmonopolyoligopolymonopolistic competition
Solution
The type of market described by a constant product price and a downward sloping resource demand curve caused by a decline in marginal product is pure competition.
Here's why:
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In a pure competition market, there are many sellers who sell identical products. This means that the price of the product is determined by the market and remains constant for all sellers.
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The resource demand curve in a pure competition market is downward sloping. This is because as more of a resource is employed, the marginal product of the resource declines due to the law of diminishing returns. This leads to a decrease in the demand for the resource.
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Monopoly, oligopoly, and monopolistic competition markets do not have a constant product price. The price in these markets is influenced by the individual seller or a group of sellers.
Therefore, the correct answer is pure competition.
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