Which of the Following Is True Under Conditions of Pure

question 92

Multiple Choice

Which of the following is true under conditions of pure competition?

• A)There are differentiated products.
• B)The market demand curve is perfectly elastic.
• C)No single firm can influence the market price by changing its production level.
• D)Each individual firm has the ability to set its own price.

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Definitions:

Competitive Markets

Competitive markets are characterized by many buyers and sellers, allowing for free and open competition which dictates prices and quality of goods and services.

Economies Of Scale

The property whereby long-run average total cost falls as the quantity of output increases.

Competition

The rivalry among sellers trying to achieve such goals as increasing profits, market share, and sales volume by varying the elements of the marketing mix: price, product, distribution, and promotion.

Business-stealing Externality

A situation where a new entrant in a market captures a portion of the incumbent firms' customers, causing economic losses to existing businesses.