ECONOMICS
COMPETITION AND MARKET STRUCTURES
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
True
|
|
|
False
|
|
|
Either A or B
|
|
|
None of the above
|
Detailed explanation-1: -Firms in a perfectly competitive market are all price takers because no one firm has enough market control. Unlike a monopolistic market, firms in a perfectly competitive market have a small market share. Barriers to entry are relatively low, and firms can enter and exit the market easily.
Detailed explanation-2: -A monopolist is considered to be a price maker, and can set the price of the product that it sells. However, the monopolist is constrained by consumer willingness and ability to purchase the good, also called demand.
Detailed explanation-3: -Firms in a perfectly competitive market are said to be price takers-that is, once the market determines an equilibrium price for the product, firms must accept this price.
Detailed explanation-4: -The correct answer is b) A purely competitive firm is a “price-taker” and a monopolistic firm is a “price-maker".