The Presence of Competition in Free Markets

question 15

Multiple Choice

The presence of competition in free markets:

• A)typically results in better quality and lower prices.
• B)is rare,since most markets eventually evolve into monopolies.
• C)is undesirable because it results in unnecessary duplication of efforts.
• D)is undesirable,because one big firm can usually produce goods more efficiently than a large number of small firms.

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Definitions:

Accounting Profit

The net income for a company after all expenses have been subtracted from total revenue, according to standard accounting practices.

Explicit Costs

Direct, out-of-pocket expenses incurred in the operation of a business or the execution of a transaction.

Production

The process or method of creating goods and services through the combination of labor, materials, and technology.

Fixed Inputs

Resources in production that remain constant in quantity regardless of the level of output or activity.