BUSINESS ADMINISTRATION
BUSINESS ENVIRONMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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no single business has a significant impact on quality, price, or supply for a given product
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each business contributes the same amount toward the gross domestic product (GDP) for a given product
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there are many sellers vying for the buyers in a given market
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there are a small number of sellers, each with substantial market share, vying for the many buyers in the market
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Detailed explanation-1: -Arguably, perfect competition is a more efficient market structure, due to the perfectly elastic demand curve as well as companies in a perfect competition structure producing at their lowest cost as MC=AC.
Detailed explanation-2: -In economic theory, perfect competition occurs when all companies sell identical products, market share does not influence price, companies are able to enter or exit without barriers, buyers have perfect or full information, and companies cannot determine prices.
Detailed explanation-3: -Answer and Explanation: Option D is correct. In the short run, perfectly competitive firm can make losses or positive economic profits.
Detailed explanation-4: -The three primary characteristics of perfect competition are (1) no company holds a substantial market share, (2) the industry output is standardized, and (3) there is freedom of entry and exit. The efficient market equilibrium in a perfect competition is where marginal revenue equals marginal cost.