Question

Some economists argue that competitive price-searcher markets are inefficient because

Answer 1

Answer:

A competitive price-searcher market is a market where there are low entry or exit barriers, and the suppliers can determine the price of their products. Some economists believe that this type of market is inefficient because the suppliers are not able to sell enough output in order to minimize their average costs. Since the demand is very elastic in price searcher markets, any price change will cause a drastic change in the quantity demanded.

Price searcher markets share a lot of similarities with perfect competition markets, the main difference is that suppliers and consumers are not price takers. This means that any supplier can change their sales output by changing their price, which leads to greater competition.