Competitive markets exist when
A) there are so many buyers and sellers that each has only a small impact on the market price and the market output.
B) there are more buyers than sellers,giving the buyers market power.
C) there are more sellers than buyers,giving the sellers market power.
D) accounting profits become zero because of price wars.
E) prices are so low that everyone who wants the good or service gets the good or service.

Question

Quizplus · Accepted Answer

Competitive markets exist when there are so many buyers and sellers that each has only a small impact on the market price and the market output. This leads to a situation where no single buyer or seller can influence the price or quantity of the good or service in the market, and everyone has to accept the prevailing market price. This is the essence of perfect competition, which is often used as a benchmark for studying other market structures. The other options do not accurately describe competitive markets.

Competitive Markets Exist When