A competitive economy assumes each industry consists of a:
A) large number of small firms facing a large number of small buyers.
B) few large firms facing a large number of small buyers.
C) large number of small firms facing a few large buyers.
D) few small firms facing a few small buyers.

Question

Quizplus · Accepted Answer

A competitive economy assumes that each industry consists of a large number of small firms facing a large number of small buyers. This promotes competition, which in turn keeps prices in check and incentivizes firms to innovate and improve their products or services. In such an environment, consumers have more choices and can easily switch to other providers if they are not satisfied with the price or quality of the goods or services they receive.

A Competitive Economy Assumes Each Industry Consists of A