Multiple Choice
If stone and brick are substitutes in home construction, what is likely to happen in a competitive market if the price of stone increases?
93
views
3. The Market Forces of Supply and Demand
Competitive Markets
Multiple Choice
In a competitive market, sellers choose:
A
the market price for their goods
B
the quantity of goods to produce
C
the demand curve for the market
D
the income of buyers
Verified step by step guidance1
Understand the nature of a competitive market: In a perfectly competitive market, there are many sellers and buyers, and no single seller can influence the market price.
Recall that in such markets, the price is determined by the intersection of overall market supply and demand, not by individual sellers.
Recognize that individual sellers are price takers, meaning they accept the market price as given and cannot set it themselves.
Therefore, sellers decide how much quantity to produce and sell at the given market price to maximize their profit.
Conclude that the correct choice for sellers in a competitive market is to choose the quantity of goods to produce, given the market price.
Related Videos
Related Practice
