William and Carrie Go to the Local Farmer's Market Every

question 20

Multiple Choice

William and Carrie go to the local Farmer's Market every Saturday morning.The market has many vegetable stands,many flower stalls,many artisan craft stalls selling handmade soaps and scented oils,and many stalls selling yard ornaments.All of the sellers within a sales category (vegetables,flowers,artisan crafts,and ornaments) sell their goods for essentially the same price,with little variation.Carrie comments to William that the vegetable stands enjoy perfect competition.What factors did she take into consideration when making this comment?

• A) She is considering that there are many buyers and sellers of a product and no single buyer or seller is powerful enough to affect the price of that product.
• B) She is considering that there are many sellers and few buyers so the sellers set their own perfect price.
• C) She is considering that the vegetables are in perfect condition so the competition should also be perfect.
• D) She is considering that vegetables,flowers,and crafts are different products and thus one could not be substituted for another so the vegetable stands are in a perfect location with a perfect market to sell their produce.

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Definitions:

Marginal Revenue Curve

A graph that shows how marginal revenue varies as the quantity of output changes, typically downward sloping for firms in competitive markets.

Perfect Competitor

A market structure in which numerous small firms compete against each other with identical products, no single firm can influence the market price; all firms are price takers.

Marginal Revenue

Extra income gained by disposing of one additional unit of a good or service.

Marginal Cost

The expense associated with manufacturing an extra single unit of a product or service.