Multiple Choice
1. In a competitive market, what strategy is a company most likely using if it creates a distinctive product to stand out from its rivals?
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3. The Market Forces of Supply and Demand
Competitive Markets
Multiple Choice
In a market or free enterprise economy, competition ensures ___.
A
prices are always fixed by the government
B
monopolies dominate all industries
C
consumers have no influence on market outcomes
D
resources are allocated efficiently
Verified step by step guidance1
Understand the role of competition in a free enterprise economy: Competition among firms drives them to be efficient and responsive to consumer preferences.
Recall that in a competitive market, prices are determined by supply and demand, not fixed by the government, so the first option is incorrect.
Recognize that monopolies dominating all industries contradict the idea of competition, so the second option is incorrect.
Note that consumers do have influence on market outcomes through their purchasing choices, so the third option is incorrect.
Conclude that competition leads to efficient allocation of resources because firms must use resources in ways that best satisfy consumer wants, making the last option correct.
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