Which of the Following Assumptions Applies to Both Perfect Competition

question 104

Multiple Choice

Which of the following assumptions applies to both perfect competition and monopolistic competition?

• A) many buyers and sellers
• B) easy entry into and exit from the market
• C) profit-maximizing behavior by firms in both market structures
• D) a and c
• E) all of the above

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Definitions:

Consumer Surplus

The variance between the amount consumers are ready to spend on a good or service and the actual amount they pay.

Efficiency

The degree to which resources are used effectively and waste is minimized, often aiming at maximizing output from given inputs.

Highest-value Bidder

The participant in an auction willing to pay the most for the item up for bid.

English Auction

A public sale method where bids are openly made and raised until no higher bid is offered, with the highest bidder purchasing the item.