In a perfectly competitive market,
A) there can be few or many buyers and sellers
B) the price is driven upward when suppliers hold back on goods and services
C) each participant is too small to affect the market price
D) government intervention is needed to ensure that prices are fair for consumers
E) resources are allocated by a central authority

Question

Quizplus · Accepted Answer

In a perfectly competitive market, each participant is too small to affect the market price. This means that no single buyer or seller can influence the market price, and prices are determined solely by supply and demand. This is the defining feature of a perfectly competitive market, where buyers and sellers are price takers rather than price setters. The other choices are incorrect: A is not necessarily true, B is the opposite of what happens in a competitive market, D is unnecessary in a perfectly competitive market, and E is the opposite of a free market.

In a Perfectly Competitive Market