Question

In a perfectly competitive market, a. every seller tries to undercut the prices charged by its rivals. b. every seller takes the price of its product as set by market conditions. c. one seller has successfully outcompeted its rivals so no other sellers remain. d. every seller tries to distinguish itself by offering a better product than its rivals

Answer 1

In a perfectly competitive market, every seller takes the price of its product as set by market conditions.

What is a Perfect Competitive Market?

Perfect competition is an ideal type of market structure where all producers and consumers have full and symmetric information and no transaction costs. There are a large number of producers and consumers competing with one another in this kind of environment.

Perfect competition is a market structure where many firms offer a homogeneous product. Because there is freedom of entry and exit and perfect information, firms will make normal profits and prices will be kept low by competitive pressures.

What are some examples of Perfectly Competitive Markets?

3 Perfect Competition Examples

1. Agriculture: In this market, products are very similar. Carrots, potatoes, and grain are all generic, with many farmers producing them.
2. Foreign Exchange Markets: In this market, traders exchange currencies.
3. Online shopping: We may not see the internet as a distinct market.

Thus, we can say that the correct option is B.

Learn more about Perfectly Competitive Markets on:

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