The figure given below shows the revenue and cost curves of a firm. MC represents the marginal cost curve, AC the average cost curve, MR the marginal revenue curve, and AR the average revenue curve.Figure 9.4

-An industry which has no barriers to entry, no product-promotion strategy, a standardized product, and a very large number of firms operating within it, is said to have:
A)a monopoly market structure.
B)perfect competition.
C)monopsonistic competition.
D)monopolistic competition.
E)an oligopoly market structure.

Question

The figure given below shows the revenue and cost curves of a firm. MC represents the marginal cost curve, AC the average cost curve, MR the marginal revenue curve, and AR the average revenue curve.Figure 9.4
 
-An industry which has no barriers to entry, no product-promotion strategy, a standardized product, and a very large number of firms operating within it, is said to have:
A)a monopoly market structure. 
B)perfect competition. 
C)monopsonistic competition. 
D)monopolistic competition. 
E)an oligopoly market structure.

Quizplus · Accepted Answer

The characteristics of the market in the question suggest perfect competition, where there are many firms with no barriers to entry, a standardized product, and no product promotion strategies. This is not monopolistic competition, which implies that firms differentiate their products to some degree, nor is it a monopsony or monopoly market structure, which have fewer firms or a dominant buyer. It also does not fit the definition of an oligopoly, which involves a few dominant firms that have significant market power. Therefore, the best choice would be B, perfect competition.

The Figure Given Below Shows the Revenue and Cost Curves