Which of the following statements is true regarding perfect competition?
a. A perfectly competitive market only exists in the agricultural market.
b. A perfectly competitive market is a hypothetical extreme.
c. There are many examples of perfectly competitive markets in different industries.
d. Perfectly competitive markets are the opposite of price takers.
b. A perfectly competitive market is a hypothetical extreme.
A perfectly competitive market is a hypothetical extreme; however, producers in a number of industries do face many competitor firms selling highly similar goods, in which case they must often act as price takers.
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A good that has social costs that are equal to private costs has a price that is
A) too high. B) too low. C) just right. D) equal to marginal cost.
Refer to the graph below representing the purely competitive market for a product. When the market is at equilibrium, the value of the total benefits derived by consumers from this product would be represented by the area:
A. a + b + c + d
B. a + b + c
C. a
D. b + c