Which condition will encourage competition?
A) Government licensing requirements in order to enter an industry
B) A small number of buyers and sellers in a market
C) The freedom of sellers and buyers to enter or exit an industry
D) The government serving as the only supplier of goods to consumers

Question

Quizplus · Accepted Answer

The freedom of sellers and buyers to enter or exit an industry encourages competition because it allows new businesses to enter the market and existing businesses to innovate and improve their products or services. This creates more choices for consumers and leads to competitive pricing. Government licensing requirements (A) can limit competition by creating barriers to entry for new businesses. A small number of buyers and sellers in a market (B) can lead to oligopoly or monopoly conditions where competition is limited. The government serving as the only supplier of goods to consumers (D) creates a monopoly and eliminates competition.

Which Condition Will Encourage Competition