Multiple Choice
Which of the following items is most likely to be sold in a market characterized by pure competition?
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3. The Market Forces of Supply and Demand
Competitive Markets
Multiple Choice
All competitive markets involve which of the following?
A
Government regulation of prices
B
Barriers to entry for new firms
C
Many buyers and sellers, each unable to influence the market price
D
A single seller who sets the price for all buyers
Verified step by step guidance1
Understand the characteristics of a perfectly competitive market. Key features include many buyers and sellers, homogeneous products, and free entry and exit from the market.
Recognize that in a perfectly competitive market, no single buyer or seller can influence the market price because each participant is too small relative to the entire market.
Identify that government regulation of prices is not a defining feature of competitive markets; prices are determined by supply and demand.
Note that barriers to entry are typically absent in competitive markets, allowing new firms to enter freely if they see profit opportunities.
Conclude that the correct characteristic is 'Many buyers and sellers, each unable to influence the market price,' distinguishing competitive markets from monopolies or oligopolies.
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