In the Theory of Perfect Competition

question 173

Multiple Choice

In the theory of perfect competition,

• A)sellers of the product are not influenced by other sellers and therefore have virtually complete control over the production and pricing of their product.
• B)buyers of the product may have a preference as to whom they purchase from based on brand loyalty.
• C)buyers and sellers of the product know everything that there is to know about the product.
• D)it can be quite expensive for a firm to enter this type of market, but once the firm is established, it will be a profitable venture.

---

Definitions:

Technological Improvements

Innovations and advancements in technology that enhance productivity, efficiency, and quality of goods and services.

Productivity

The measure of the efficiency of a person, machine, factory, system, etc., in converting inputs into useful outputs.

Average Product

The output per unit of input, such as labor or capital, calculated by dividing total output by the total quantity of the input.

Marginal Product

The additional output produced as a result of using one more unit of a particular input, holding all other inputs constant.