A competitive market is one in which:

	A)few large sellers compete for a majority of the market share.
	B)fully informed price-taking buyers and sellers easily trade a standardized good.
	C)government oversees its operation.
	D)None of these describe a competitive market.

Expert Solution

Answer: B) fully informed price-taking buyers and sellers easily trade a standardized good.

A competitive market is one in which fully informed price-taking buyers and sellers easily trade a standardized good.

A competitive market is a market in which there are many sellers sell identical goods and none of them can individually influence the market price. So all the sellers are price taker in the market. On the other side, there are many buyers in the market of those products or goods, and no individual buyer can influence the market price.So all the buyers are price taker in the market. The market price is determined by free interplay of demand and supply forces. From the sellers side, all the sellers are well informed about the market, and the consumers.Similarly all the buyers are well informed too about the market, i.e., the price and the quality of the goods. There is no entry and exit barrier in the market. Both the sellers and buyers can freely enter the market, trade the goods, and freely exit from the market. So buyers and sellers easily trade here. Over the long-run, many sellers enter the market and exit from the market of a particular commodity.

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Rahul Sunny answered 2 years ago

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