Competitive markets are characterized by
A)a small number of buyers and sellers.
B)unique products.
C)the interdependence of firms.
D)free entry and exit by firms.

Question

Quizplus · Accepted Answer

Competitive markets are characterized by the ability of firms to enter and exit the market freely, without significant barriers to entry. This allows for new firms to enter the market and for existing firms to leave if they cannot compete effectively. In a truly competitive market, there are often many buyers and sellers, and products are not typically unique, as firms are constantly seeking to match or improve upon the products offered by their competitors. The interdependence of firms is also a characteristic of competitive markets, as firms must remain aware of the actions and strategies of their competitors in order to remain competitive themselves. However, the ability of firms to freely enter and exit the market is the defining characteristic of a truly competitive market.

Competitive Markets Are Characterized by