Question

Dozens of companies produce plain white socks. Consumers regard plain white socks as standardized and don't care who manufactures their socks.
(a)-Yes, meets all assumptions
(b)-No, no free entry
(c)-No, not many sellers
(d)-No, not an identical product

Answer 1

The correct answer is A) Yes, meets all assumptions.

Dozens of companies produce plain white socks. Consumers regard plain white socks as standardized and don't care who manufactures their socks: Yes, meets all assumptions.

What we are trying to do here is to define if the affirmation is about a competitive market. And the answer is yes, it meets all assumptions. The socks market is a competitive market because it has a large number of buyers and sellers that is not as big if compared to the size of the total market. The socks matter is offering barely the same product to customers. There is no differentiation at all. And in this case, companies can enter or leave the market whenever they want.