ECONOMICS
MARKET FAILURES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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consumers do not pay more for a product than it is worth.
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the price of a product bears no relationship to its production costs.
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producers can sell at any price they choose.
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the quantity of goods produced is restricted.
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Detailed explanation-1: -Nearly perfect markets are beneficial because producers are as efficient as possible and. consumers do not pay more for a product than it is worth. the price of a product bears no relationship to its production costs. producers can sell at any price they choose.
Detailed explanation-2: -This is due to the high competition in such markets which bring down the prices. The markets that are best for producers are monopoly and oligopoly.
Detailed explanation-3: -Barriers to entry are relatively low, and firms can enter and exit the market easily. Contrary to a monopolistic market, a perfectly competitive market has many buyers and sellers, and consumers can choose where they buy their goods and services. Companies earn just enough profit to stay in business and no more.
Detailed explanation-4: -Perfectly competitive firms have the least market power (i.e., perfectly competitive firms are price takers), which yields the most efficient outcome. Monopolies have the most market power, which yields the least efficient outcome.
Detailed explanation-5: -Perfect competition is a type of marketplace where multiple companies are selling the same product or service, and a large number of consumers are looking to purchase it. None of these companies have the power to set a price for that product or service without losing business to other competitors.