Multiple Choice
Which of the following best describes the competitive tendencies of small firms in a competitive market?
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3. The Market Forces of Supply and Demand
Competitive Markets
Multiple Choice
Which of the following markets is most likely to be considered a competitive market?
A
The market for electricity distribution
B
The market for wheat
C
The market for commercial airplanes
D
The market for operating systems
Verified step by step guidance1
Step 1: Understand the characteristics of a competitive market. A competitive market typically has many buyers and sellers, homogeneous products, free entry and exit, and perfect information.
Step 2: Analyze each market option based on these characteristics. For example, electricity distribution often has few providers and high entry barriers, making it less competitive.
Step 3: Consider the market for wheat. It usually has many farmers selling a standardized product with relatively easy entry and exit, fitting the competitive market criteria.
Step 4: Evaluate the market for commercial airplanes, which is dominated by a few large firms with differentiated products and high entry barriers, indicating an oligopoly rather than perfect competition.
Step 5: Look at the market for operating systems, which is typically dominated by a few firms with differentiated products and significant barriers to entry, also not fitting the competitive market model.
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