ECONOMICS
ECONOMIC SYSTEMS
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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True
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False
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Either A or B
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None of the above
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Detailed explanation-1: -Competition can constrain buyers and sellers to be price-takers. The interaction of supply and demand determines a market equilibrium in which both buyers and sellers are price-takers, called a competitive equilibrium. Prices and quantities in competitive equilibrium change in response to supply and demand shocks.
Detailed explanation-2: -Basic economic theory demonstrates that when firms have to compete for customers, it leads to lower prices, higher quality goods and services, greater variety, and more innovation. [1] Competition is critical not only in product markets, but also in labor markets.
Detailed explanation-3: -Competition among sellers lowers costs and prices, and encourages producers to produce more of what consumers are willing and able to buy. Competition among buyers increases prices and allocates goods and services to those people who are willing and able to pay the most for them.
Detailed explanation-4: -Both supply and demand respond to changes in price and quantity. Increases or decreases in price and quantity will heavily affect the amount of supply made and the number of products demanded.