Which of the following is true of a competitive market?

Question

Quizplus · Accepted Answer

In a competitive market, the price of each unit of the good is fixed because every seller has to accept the prevailing market price, which is determined by the forces of supply and demand. If a seller charges a higher price, consumers will switch to alternative sellers who offer the same product or substitute, and if a seller charges a lower price, it will not be able to maximize its profits. Therefore, every seller has an incentive to charge the prevailing market price, which is fixed in the short-run.

Which of the Following Is True of a Competitive Market