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

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BlackTom AI · Accepted Answer

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

Option a: 'buyers in the market to have influence over the market price.' In a highly competitive market, no single buyer has enough power to set or influence the market price; prices are determined by overall supply and demand, not by individual buyers. This option overstates buyer influence and is therefore incorrect.

Option b: 'the price and quantity in the market to be determined by market forces.' This aligns with the core idea of perfect competition: numerous buyers and sellers, homogeneous products, and free entry and exit lead to prices and quantities that clear the market via supply and demand. Market forces set both price and quantity. This statement is correct.

Option c: 'buyers in the market to have influence over the market quantity.' While buyers affect demand, in aggregate their influence shapes the demand side, not the quantity independently. The market quantity is determined where supply equals demand, influenced by both buyers and sellers. As a standalone claim about buyers alone, it’s misleading and incorrect.

Option d: 'sellers in the market to have influence over the market quantity.' Similar to option c, sellers influence supply decisions, but no single seller controls quantity in a competitive market; the overall market quantity results from interaction of many firms and consumers. Stating that sellers alone determine market quantity ignores the price mechanism and market equilibrium, making this incorrect.

In summary, only option b correctly describes how market forces in a competitive environment determine both price and quantity, while the other choices erroneously attribute market power to individual buyers or sellers.

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

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

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