What Happens in a Competitive Market

question 213

Multiple Choice

What happens in a competitive market?

• A) Only a few sellers sell the same product.
• B) Each seller has limited control over the price of his product.
• C) If one buyer chooses to purchase a large quantity of the product, the price will rise.
• D) If one seller withholds his product from the market, prices will rise.

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Definitions:

Current Consumption

The portion of income or resources that is spent on goods and services at the present time, as opposed to saving for future consumption.

Budget Line

A graphical representation of all possible combinations of two goods that can be purchased at given prices and within a given budget.

Interest Rate

The percentage at which interest is paid by borrowers for the use of money that they borrow from a lender.

Inflation Rate

The percentage increase in the general level of prices for goods and services over a certain period, reflecting the decreasing purchasing power of money.