Competition is more likely to exist when:
A)there is free entry into and exit out of industries.
B)there is a single supplier of all goods and services.
C)the government purchases most goods and services.
D)products are produced by a few large firms.

Question

Quizplus · Accepted Answer

Free entry and exit into industries allows for new firms to enter the market and compete with existing firms, driving prices down and promoting competition. Choice B is incorrect because a single supplier would imply a monopoly, which reduces competition. Choice C is incorrect because government purchases do not affect the competitiveness within an industry. Choice D is incorrect because a few large firms would imply an oligopoly, which may reduce competition.

Competition Is More Likely to Exist When