If an agricultural market is perfectly competitive,which of the following types of behavior might be expected?
A)Price wars.
B)Economic profits encourage entry.
C)Advertising.
D)Collusion in restraint of trade.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, economic profits encourage entry because there are no barriers to entry or exit. This means that if profits are being made, new firms will enter the market, increasing supply and driving down prices until economic profits are eliminated. Price wars and collusion in restraint of trade are not expected in a perfectly competitive market. Advertising may occur, but it would not have a significant impact on the market since all firms are selling identical products.

If an Agricultural Market Is Perfectly Competitive,which of the Following