The presence of many buyers and sellers in a competitive markets allows

Question

BlackTom AI · Accepted Answer

When a market has a large number of buyers and sellers, their individual actions tend to be price-taking and adjustments occur through supply and demand interactions rather than through any single participant's influence.
Option a: 'buyers in the market to have influence over the market price.' In a highly competitive market with many buyers, no single buyer can influence the price; the price is determined by the aggregate interaction of all buyers and sellers, not by any one buyer.
Option b: 'sellers in the market to have influence over the market quantity.' Similarly, with many sellers, no individual seller can set the market quantity; decisions about quantity are driven by overall demand and supply in the market, not by a single seller.
Option c: 'buyers in the market to have influence over the market quantity.' This suggests that buyers alone control how much is produced or exchanged, which conflicts with the standard model of perfect competition where quantity is determined by the interaction of all buyers and sellers across the market, not by buyers in isolation.
Option d: 'the price and quantity in the market to be determined by market forces.' This statement captures the core idea of a competitive market: prices emerge from the forces of supply and demand, and the equilibrium quantity is established where the market supply intersects market demand, reflecting the collective actions of many buyers and sellers rather than a single actor.
In summary, the competitive market structure relies on price-taking behavior and mutual adjustments among numerous participants, leading to outcomes governed by market forces rather than individual influence.

MCD2020 - T1 - 2025 Lecture Quiz 7 - Firms in Competitive Markets

The presence of many buyers and sellers in a competitive markets allows

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MCD2020 - T1 - 2025 Lecture Quiz 7 - Firms in Competitive Markets

The presence of many buyers and sellers in a competitive markets allows

View Explanation

Log in for full answers

Similar Questions

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Assume that a competitive industry producing a normal good is in long-run equilibrium. If average consumer income decreases, which of the following changes will occur?

Which of the following describes how a market will respond when the scarcity of a good increases?

Assume that consumers consider popcorn and pretzels to be substitutes. A significant decrease in the supply of popcorn will affect the pretzel market by

In the coffee market, which of the following changes will increase the price and decrease the quantity of coffee?

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