ECONOMICS
COMPETITION AND MARKET STRUCTURES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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products are similar but not identical.
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numerous restrictions prevent firms from entering the market.
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no seller can sell a product above the prevailing market price.
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a single seller can affect price.
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Detailed explanation-1: -This means that no individual buyer or seller can control the price of the commodity. Further, units can be sold only at the price fixed by the industry. In other words, the firm is a price taker and the industry is a price maker. In essence, there are uniform prices in a perfectly competitive market for a commodity.
Detailed explanation-2: -A perfectly competitive firm is known as a price taker because the pressure of competing firms forces them to accept the prevailing equilibrium price in the market. If a firm in a perfectly competitive market raises the price of its product by so much as a penny, it will lose all of its sales to competitors.
Detailed explanation-3: -The market, not individual consumers or firms, determines price in the model of perfect competition. No individual has enough power in a perfectly competitive market to have any impact on that price.
Detailed explanation-4: -The most fundamental is perfect competition, in which there are large numbers of identical suppliers and demanders of the same product, buyer and sellers can find one another at no cost, and no barriers prevent new suppliers from entering the market. In perfect competition, no one has the ability to affect prices.
Detailed explanation-5: -Under perfect competition, price is determined by equilibrium of demand and supply.