In Competitive Markets

question 93

Multiple Choice

In competitive markets

• A) the products sold are different depending on the firm selling the product.
• B) buyers can expect to find consistently low prices and wide availability of the goods that they want.
• C) producers can expect to be able to set prices at the level they choose.
• D) it is hard for a seller to enter the market due to barriers to entry.
• E) firms will leave the market if they are making economic profits.

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Definitions:

Variability of Returns

The extent of fluctuation in the returns on an investment over a certain period of time, often used as a measure of investment risk.

Business-specific Risk

This is the risk associated with the unique factors impacting a specific company or industry, excluding broader market or economic risks.

Unsystematic Risk

The risk associated with a particular company or industry, which can be mitigated through diversification.

Diversification

The strategy of spreading investments among various financial assets to reduce risk.