A key characteristic of a competitive market is that Group of answer choicesgovernment antitrust laws regulate competition.producers sell nearly identical products.firms minimize total costs.firms have price setting power.
Question
A key characteristic of a competitive market is that Group of answer choicesgovernment antitrust laws regulate competition.producers sell nearly identical products.firms minimize total costs.firms have price setting power.
Solution
A key characteristic of a competitive market is that producers sell nearly identical products.
Here's why:
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In a competitive market, there are many buyers and sellers, so no single buyer or seller has a significant impact on the market price.
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Each seller in a competitive market sells a product that is similar to the products sold by others. Therefore, from the buyer's perspective, different sellers' products are nearly identical and can be substituted for each other.
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This means that a buyer won't prefer one seller's product over another's for reasons of quality, features, etc. The buyer will only prefer one seller over another if the preferred seller offers a lower price.
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Therefore, in a competitive market, sellers end up selling nearly identical products.
Similar Questions
A perfectly competitive market involves firms that are price takers. This guarantees:Multiple choice question.consumers receive the lowest prices.producers receive the highest prices.easy entry and exit.a large number of buyers and sellers.
A competitive market structure differs from the monopoly, oligopoly, and monopolistic competition structures in theGroup of answer choicesproducers' ability to set price.profit maximization condition.amount of long run profit.entry conditions.
A competitive market is one in whicha.there is only one seller of the product.b.each seller attempts to compete with other sellers, causing fewer sellers in the market.c.each seller of the product is free to set the price of his product.d.there are so many buyers and many sellers that each has a negligible impact on price.
A competitive market for a product must be in equilibrium when:Multiple Choicespending on the product is equal to the value of the quantity supplied.the quantity of the product bought is less than the quantity of the product sold.the number of consumers equals the number of producers.there is no tendency for the price of the product to change.
Which of the following is NOT true regarding perfectly competitive markets?Group of answer choicesIt is difficult or impossible for a firm to enter and compete in the marketAll firms in the market are price takersHomogenous goods are sold by the firmsThe market contains many buyers and sellers
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