While Very Few Markets Are "Purely Competitive" According to the Strict

question 20

Multiple Choice

While very few markets are "purely competitive" according to the strict economics definition,market analysts often use competition as

• A)the benchmark from which to judge other market settings.
• B)the standard of an inefficient market structure.
• C)an example of a market with poor entry and exit conditions.
• D)an example of a market with asymmetric information.

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Definitions:

Sunk Cost

A cost that has already been incurred and cannot be recovered.

Contribution Format

An income statement format that separates fixed and variable costs, showing contribution margin which is sales revenue minus variable costs.

Contribution Margin

The amount by which sales revenue exceeds variable costs of production, indicating how much contributes to covering fixed costs.

Variable Expenses

Costs that vary in proportion to changes in the level of activity or volume of production.