Question

For which market model is there a very large number of firms (offering the same goods for sale), which helps to lower costs and prices?

Answer 1

The market model that offers the same goods, made and sold by many companies, is called perfect competition. The goods produced are typically consumer goods needed by a large percentage of the population, thus prices are kept relatively low.

Answer 2

Answer:

A producer charges $ 500 for a cell phone, but buyers are not buying any cell phone at this price. Therefore, at this price, the producer is willing to provide more phones, and consumers are willing to buy no phones.

Explanation:

This question requires an understanding of supply and demand theory. According to this theory, consumers and suppliers interact in the market according to the price of goods and services. The consumer tends to pay the lowest possible price, while the producer tends to sell for the highest possible value. Thus, if the price is low, the consumer tends to buy more units, while the supplier tends to offer less or no quantity. Conversely, if the price is high, the supplier tends to offer more quantities while the consumer tends to buy less or no quantity.

In a competitive market, the realization of the sale will depend on a price value at which both are willing to trade. This price is adjustable since if no quantity is sold, the supplier tends to lower the price and if the price is cheap, consumption increases and the price tends to increase. At some point the selling price will be equal to the price that the consumer is willing to pay, this will be the equilibrium price where supply and demand match.