Which of the following is a characteristic of a competitive market?
A)There are many buyers but few sellers.
B)Many firms have market power because they own patents.
C)Buyers and sellers are price takers.
D)Firms sell differentiated products.

Question

Quizplus · Accepted Answer

In a competitive market, buyers and sellers are price takers, which means they have no influence over the price and have to accept the market price. In a market with many buyers but few sellers (option A), sellers have more market power, while in a market where many firms have patents (option B), the firms have a monopoly on their products. Differentiated products (option D) also suggest that firms have some market power and are not perfect substitutes, which is not consistent with a perfectly competitive market.

Which of the Following Is a Characteristic of a Competitive