In a Perfectly Competitive Market Structure Both Buyers and Sellers

question 370

Multiple Choice

In a perfectly competitive market structure both buyers and sellers have equal access to information. This implies

• A) the products sold will be alike.
• B) firms will move labor and capital in pursuit of profit-making opportunities to whatever business venture gives them the highest return on their investment.
• C) no one buyer or seller has any influence on price.
• D) consumers are able to find out about lower prices charged by other firms.

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Definitions:

Long Run

A time frame in economics where all factors of production and costs are variable, allowing for complete adjustment to changes in the market or economic environment.

Profit-Maximizing

A strategy or point at which a business reaches the highest possible level of profit through the adjustment of sale prices, production costs, and output volume.

Level of Output

The total volume of goods or services produced by a firm, industry, or economy within a given period.

Perfect Competitor

A theoretical market structure in which many firms sell identical products, entry and exit are free, and no single buyer or seller can influence the market price.