Competition in a market system denotes a condition where:
A) The diffusion of economic power limits its potential abuse
B) Any given product can be purchased at a wide range of prices
C) Contractual agreements among individual firms are restricted and avoided
D) A few large sellers are constantly jostling for market share

Question

Quizplus · Accepted Answer

Competition in a market system refers to a situation where there are several buyers and sellers engaging in economic transactions. The diffusion of economic power among many players limits the potential abuse of market power by any individual buyer or seller. This fosters a level-playing field where all players have an opportunity to succeed based on their performance, innovation, and efficiency. Therefore, option A is the best choice. Option B is incorrect because competition does not necessarily mean that all products will have a wide range of prices - the prices will be set based on supply and demand, and the competition will happen at those price points. Option C is incorrect because, although contractual agreements may be restricted in some cases, they are not the focus of competition. Option D may occur in some cases, but it does not define competition per se - there can be several small players in a competitive market or even a "monopolistic competition."

Competition in a Market System Denotes a Condition Where