In a Perfectly Competitive Market

question 129

Multiple Choice

In a perfectly competitive market,

• A) there can be few or many buyers and sellers
• B) the price is driven upward when suppliers hold back on goods and services
• C) each participant is too small to affect the market price
• D) government intervention is needed to ensure that prices are fair for consumers
• E) resources are allocated by a central authority

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Definitions:

Demand Curve

A visual chart that illustrates how the quantity of a product or service desired by buyers varies with its price.

Unitary Elasticity

A situation in economics where a change in the price of a good or service results in a proportional change in the quantity demanded or supplied.

Sandwich Shop

A food establishment that specializes in selling sandwiches and often other types of lunch food and beverages.

Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in the price of that good.