Question 1

Which of the following statements correctly describes a perfectly competitive market?

Accepted Answer

In a perfectly competitive market, there are many buyers and sellers and no one participant has the ability to influence the market price. Therefore, all participants are price-takers and must accept the market price as it is determined by the forces of supply and demand. Haggling and bargaining are not commonly observed in such a market because there is no room for individual negotiation of prices. Additionally, buyers in a perfectly competitive market pay the same price for the same good, as there is no differentiation in products. Therefore, option A is the correct statement describing a perfectly competitive market.

Question 2

Suppose the market for cement is such that the output of all sellers is identical in composition and quality.While there are a large number of buyers and sellers,everyone conducts transactions at a common market price.Which of the following statements is true about the structure of the cement market?

Accepted Answer

The given description fits the criteria for a perfectly competitive market, where all firms produce homogeneous products and sell at a common market price, with no individual seller having the ability to influence the market price. Therefore, option A is the correct answer. Option B is incorrect because nothing has been mentioned about government regulation. Option C is incorrect because no participant in a perfectly competitive market is a price-maker. Option D is also incorrect because the mention of a large number of buyers and sellers indicates voluntary transactions.

Question 3

A seller who is a price-taker charges ________.

Accepted Answer

A price-taker is a seller who has no control over the market price and must accept the prevailing market price to sell their goods or services. Therefore, they charge the market price.

Question 4

In competitive markets,firms ________.

Accepted Answer

In competitive markets, firms take the market price as given and adjust their output accordingly. They do not coordinate pricing decisions with other firms or set the market price themselves. Also, the government usually does not set maximum and minimum prices in competitive markets.

Question 5

Which of the following is not a required characteristic of a market?

Accepted Answer

Government setting the price of the good or service is not a required characteristic of a market. The price of a good or service is typically determined by supply and demand in a competitive market, rather than by government intervention.

Question 6

The automobile market in the United States is often said to be highly competitive.But it is not perfectly competitive.What makes this market not perfectly competitive?

Accepted Answer

Different car companies make different vehicles with different features, meaning that each company has some degree of market power and control over their pricing and product differentiation, leading to an imperfectly competitive market. B and D are incorrect because individual buyers or sellers do not have enough power in the market to dictate prices. C is also incorrect because having more than three major companies does not necessarily make a market perfectly or imperfectly competitive.

Question 7

The gasoline market in the United States is often said to be highly competitive.But it is not perfectly competitive.What makes this market not perfectly competitive?

Accepted Answer

The answer of The gasoline market in the United States...

Question 8

Which of the following statements correctly describes a competitive market?

Accepted Answer

A competitive market refers to a market where many buyers and sellers interact to determine the market price. In a competitive market, there is no single buyer or seller that can influence the market price. Instead, the market price is determined by the interaction of demand and supply. Therefore, option D correctly describes a competitive market. Option A is incorrect because buyers and sellers do not typically negotiate prices in a competitive market. Option B is incorrect because in a competitive market, the market price is the same for all sellers. Option C is incorrect because a single seller cannot dictate the market price in a competitive market.

Question 9

Which of the following is not an example of a market?

Accepted Answer

The requirement for homeowners to pay $500 for a sidewalk is not a market as there is no exchange of goods or services between buyers and sellers. The other options all involve buying and selling goods or services.

Question 10

Which of the following does NOT have a market in the real world?

Accepted Answer

All of the options listed have a market in the real world, even if they may be restricted or illegal in some cases. Therefore, the correct answer is D, none of the above.

Question 11

Explain the role of prices in a market.

Accepted Answer

The answer of Explain the role of prices in a...

Question 12

Which of the following is true of a market?

Accepted Answer

In every market, price acts as a selection device for both buyers and sellers. The price mechanism helps to allocate resources efficiently by bringing the supply and demand for a good or service into balance. This is a fundamental characteristic of all markets, regardless of their specific physical location or whether or not they are subject to government control. Market prices are also influenced by factors such as competition, transportation costs, and changes in consumer preferences, all of which can affect supply and demand in individual markets.

Question 13

Why do economists study perfectly competitive markets even though few,if any,markets in the real world are perfectly competitive?

Accepted Answer

The perfectly competitive market is a good approximation to many markets in the real world and helps us understand how real markets work. It provides a useful benchmark for comparison and can help policymakers understand the impact of various policies on market outcomes. However, it is important to recognize that real-world markets may differ from the perfectly competitive model in significant ways, and so caution should be exercised in applying insights gained from the model to real-world situations.

Question 14

In a perfectly competitive market,________.

Accepted Answer

In a perfectly competitive market, all sellers sell an identical good or service. This means that there is no differentiation between the products and all customers have access to the same information about the product, prices and quality. This also means that customers can easily switch to other sellers if they find a better deal elsewhere, resulting in sellers having to compete solely based on price. Therefore, while options A and D are incorrect, option B is also incorrect as it describes a monopoly market with only one seller.

Question 15

A(n)________ is a group of buyers and sellers who are trading goods and/or services.

Accepted Answer

A market is a group of buyers and sellers who come together to exchange goods and/or services. A firm is a business organization that produces and sells goods or services, an enterprise is a synonym used to describe a business or company, and the government is a public entity that creates policies and laws. Therefore, the best choice is B, market.

Question 16

Should an economist consider a Web-based job search portal like Monster.com as a market?

Accepted Answer

The answer of Should an economist consider a Web-based job...

Question 17

Which of the following examples best approximates a competitive market?

Accepted Answer

The market for soybeans in the United States is the most competitive because there are many farmers who grow soybeans and many buyers who can choose to buy from different farmers. This means no single buyer or seller has significant control over the price of soybeans. The other options are less competitive because there are fewer sellers (F-35 fighter planes and Jackson Pollock paintings) or fewer buyers (Tesla electric cars).

Question 18

The gasoline market in the United States is often said to be highly competitive.It is not perfectly competitive,but it has features and results that are similar to those of a perfectly competitive market,such as ________.

Accepted Answer

All of the above statements are true for a gasoline market that is highly competitive but not perfectly competitive. In a perfectly competitive market, there are a large number of buyers and sellers, and no individual can influence the market price by themselves. The fact that an individual buyer or gas station cannot influence the market price on their own suggests that the gasoline market is highly competitive, but not perfectly competitive. Additionally, the fact that gas stations located near each other tend to charge similar prices is also evidence of high competition in the market.

Question 19

Which of the following is a feature of a perfectly competitive market?

Accepted Answer

In a perfectly competitive market, each seller is too small to influence the market price. This means that no single seller can change the price of the commodity they are selling, and instead must accept the market price. This feature is what makes a perfectly competitive market efficient, as it ensures that the price is determined by supply and demand rather than by individual sellers. The other options listed are not features of a perfectly competitive market.

Question 20

If all sellers and all buyers face the same price during an exchange,it is referred to as the ________.

Accepted Answer

The term used for a situation where all buyers and sellers face the same price is market price. It is determined by the forces of supply and demand in the market. The other options: mark-up price is the price above the cost price that a seller charges as profit, discounted price is a price lower than the original price due to a sale or discount, and cost price is the price at which a product or service is acquired by the seller.

Quiz 4: Demand, supply, and Equilibrium