ECONOMICS
COMPETITION AND MARKET STRUCTURES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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It will rise
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It will fall
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stays the same
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Unknowable
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Detailed explanation-1: -More competition means greater choice and more services Because they can access a wider range of products and services, consumers – and also businesses, as consumers of raw materials – can find the product that best meets their needs.
Detailed explanation-2: -When market demand decreases, the market price of the good falls and the market quantity decreases. Because the price equals marginal revenue, the fall in the price means marginal revenue falls. As a result, each firm moves down its marginal cost curve so each firm decreases the quantity it produces.
Detailed explanation-3: -In a competitive market, sellers compete against other suppliers to sell their products and buyers bid against other buyers to obtain the product. This competition of sellers against sellers and buyers against buyers determines the price of the product. It’s called supply and demand.
Detailed explanation-4: -As new firms enter, the supply curve shifts to the right, price falls, and profits fall. Firms continue to enter the industry until economic profits fall to zero.