Multiple Choice
A business would want to concentrate its production facilities in a centralized location when:
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3. The Market Forces of Supply and Demand
Competitive Markets
Multiple Choice
Assume Lianna buys coffee beans in a competitive market. It follows that:
A
Lianna cannot influence the price of coffee beans and must accept the market price.
B
Lianna faces different prices for coffee beans depending on the seller.
C
Lianna can negotiate a lower price for coffee beans due to her bargaining power.
D
Lianna is the only buyer in the market and sets the price for coffee beans.
Verified step by step guidance1
Step 1: Understand the characteristics of a competitive market. In a perfectly competitive market, there are many buyers and sellers, and no single buyer or seller can influence the market price.
Step 2: Recognize that in such a market, the price is determined by the overall market supply and demand, not by individual participants. Therefore, each buyer, including Lianna, is a price taker.
Step 3: Analyze the options given: if Lianna could influence the price or negotiate different prices, it would imply market power, which contradicts the competitive market assumption.
Step 4: Conclude that Lianna must accept the market price for coffee beans because she cannot influence it or negotiate different prices.
Step 5: Summarize that the correct statement is that Lianna cannot influence the price of coffee beans and must accept the market price.
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