Competitive Price-Taker Markets Are Characterized by

question 188

Multiple Choice

Competitive price-taker markets are characterized by

• A) firms that all produce the same product.
• B) a small number of firms in the market.
• C) firms that are large relative to the size of the market.
• D) widespread use of advertising as a competitive weapon.

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Definitions:

Market Failure

A situation where the allocation of goods and services by a free market is not efficient, often leading to negative externalities or a lack of public goods.

Competitive Market

A market structure characterized by a large number of buyers and sellers, free entry and exit, and a product for which each seller offers an identical product.

Deadweight Loss

A loss in economic efficiency that occurs when equilibrium for a good or service is not achieved or is not achievable.

Price Floor

A government-imposed limit on how low a price can be charged for a product, service, or commodity.