Explain what is meant by a competitive market
Please provide the best answer for the statement.
A competitive market is an institution or mechanism which brings together large numbers of independently acting buyers and sellers who want to exchange some standardized product. If the product is not standardized, then the market is not “purely competitive,” although it may be very competitive. Examples of purely competitive markets are a central grain exchange, a stock market or a market for foreign currencies where there are many buyers and sellers acting independently.
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Which of the following is a characteristic of a competitive price-taker market?
a. Profit maximizing firms in the market will expand output until price equals average variable cost. b. The market demand curve for the product is a horizontal line. c. There are many firms in the market, each producing a small share of total market output. d. The product produced by each of the firms is differentiated.
A roller coaster operator produces thrill-packed rides using electricity and a roller coaster. For the roller coaster operator, electricity is
a. an opportunity cost. b. a variable cost. c. a fixed cost. d. a sunk cost.