Which of the Following Is a Characteristic of a Competitive

question 179

Multiple Choice

Which of the following is a characteristic of a competitive price-taker market?

• A) Profit maximizing firms in the market will expand output until price equals average variable cost.
• B) The market demand curve for the product is a horizontal line.
• C) There are many firms in the market, each producing a small share of total market output.
• D) The product produced by each of the firms is differentiated.

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Definitions:

WARP

Weak Axiom of Revealed Preference, a theory in economics that assumes if a consumer prefers product A over B when both are available, then they will not choose B when A is available.

Bundle

An assortment of items or services combined and offered for sale as a complete set.

Laspeyres Price Index

A measure of inflation computed by taking the ratio of the total cost of purchasing a specified basket of goods at current prices to the cost of those same goods at base-year prices.

Base Year

A base year is a specific year against which economic or financial data are measured and compared. It often serves as a reference point for calculating indexes and growth rates.