In a Competitive Market, the Actions of Any Single Buyer

question 136

Multiple Choice

In a competitive market, the actions of any single buyer or seller will

• A)have a negligible impact on the market price.
• B)have little effect on market equilibrium quantity but will affect market equilibrium price.
• C)affect marginal revenue and average revenue but not price.
• D)adversely affect the profitability of more than one firm in the market.

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Definitions:

Average Fixed Cost

The fixed costs of production divided by the quantity of output produced, decreasing as more is produced.

Short Run

A time period in economics where at least one factor of production is fixed, limiting the ability of businesses to adjust to changing market conditions.

Equilibrium Price

The price at which the quantity of a good or service demanded equals the quantity supplied, leading to market balance.

Demand Curve

is a graph showing the relationship between the price of a good or service and the quantity demanded by consumers, typically downsloping to indicate that lower prices increase demand.