Which of the following is not a characteristic of a competitive market ?
Correct answer: D. Firms generate small but positive economic profits in the long run
- A. All of these answers are characteristic of a competitive market
- B. The are many buyers and sellers in the market
- C. The goods offered for sale are largely the same.
- D. Firms generate small but positive economic profits in the long run
- E. Firms can freely enter or exit the market
Explanation
Free entry and exit eliminate positive economic profit in the long run, leaving firms with normal profit. Many buyers and sellers and largely identical products are standard features of perfect competition.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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