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:

Weak Axiom

In the context of consumer choice theory, it is a postulate stating that if a consumer prefers bundle A over bundle B when both are affordable, then she will not choose B when A becomes more affordable.

Revealed Preferences

The theory that consumers' preferences can be determined by their purchasing habits and behavior rather than through their expressed desires or responses to surveys.

Preferences

The subjective tastes or desires of individuals or entities, which determine their choices among various options.

Inferior Good

A type of good for which demand decreases as the income of consumers increases, contrasting with normal goods.