Which of the following characterizes a competitive agricultural market?
A)The firm has a downward-sloping demand curve.
B)The market has a horizontal demand curve.
C)Price is determined by market demand and market supply.
D)Economic profit is earned in the long run.

Question

Quizplus · Accepted Answer

A competitive agricultural market is one where price is solely determined by the intersection of market demand and market supply, without any individual firm having significant market power to affect price. This implies a horizontal demand curve, as any firm attempting to charge a higher price than prevailing market price would lose all its customers. Economic profit in the long run is unlikely, as firms will enter and exit the market to the point where price equals the minimum average total cost of production. A downward-sloping demand curve implies some degree of market power for the firm, which would go against the notion of a competitive market.

Which of the Following Characterizes a Competitive Agricultural Market