In a competitive equilibrium,we assume that markets are such that
A) consumers are price takers while firms set prices.
B) firms are price takers while consumers set prices.
C) both consumers and firms are price takers.
D) firms behave strategically in setting their prices.
E) consumers behave strategically in setting their prices.

Question

Quizplus · Accepted Answer

A competitive equilibrium implies that both consumers and firms are price takers. This means that they cannot influence the market price through their individual actions and must accept the prevailing market price as given. The market price is determined through the interaction of supply and demand forces in the market.

In a Competitive Equilibrium,we Assume That Markets Are Such That