ECONOMICS
INCENTIVES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A
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B
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C
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D
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Detailed explanation-1: -A competitive market creates competition among consumers. This means that one consumer competes with another for a good or service, especially for diminished stock. For example, when it comes to purchasing tickets to a sporting event or music concert, consumers often compete to buy the best seats.
Detailed explanation-2: -A competitive market is one where there are numerous producers that compete with one another in hopes to provide goods and services we, as consumers, want and need. In other words, not one single producer can dictate the market. Also, like producers, not one consumer can dictate the market either.
Detailed explanation-3: -All firms in a perfectly competitive market earn normal profit in the long run. Normal profit is revenue minus expenses.
Detailed explanation-4: -In perfect competition, any profit-maximizing producer faces a market price equal to its marginal cost (P = MC). This implies that a factor’s price equals the factor’s marginal revenue product.