All the existing firms in a monopolistically competitive market advertise, and the number of firms in the market increases. the demand for any one firm's product decreases such that the price-maximizing quantity for any one firm decreases. complete the sentences. the demand faced by any one firm becomes elastic.
cut back on production.
Explanation: A competitive market simply means one which feature many producers willing to produce or provide the necessary consumer goods required. The market is competitive because no single producer can make a decision on the price of product being produced because the withdrawal of such producer won't be felt due to the large number of producers available and ready to satisfy the demands of the consumers.
The number of firms in a competitive market will tend to increase when existing firms make reasonable economic profit. And with the number of firms vying to produce the same goods increasing, cutting back production seems to be a reasonable move, that is reduction in production rate in other to control for the likely impact whuch could occur due to the influx of new production firms.
Option (D) is correct.
Correct Option: All of the above.
In a perfectly competitive market, there are large number of buyers and sellers in a market. Single buyer and single seller won't be able to affect the price of the market.
All the firms in this market scenario selling a standardized product.
Price of the product will be determined by the market forces. In this market, individual firms are generally facing a horizontal demand curve where price is equal to the marginal revenue. Because demand curve is parallel to x-axis and it is perfectly elastic, so there will be no changes in prices if there is a change in a demand.
Profit maximizing condition for the competitive firms is a point where price is equal to the marginal cost.
A. In a perfectly competitive market the number of firms is so large that no individual firm can affect the price. Thus, A is correct.
B. All firms in a perfect competition sells same product without any differentiation thus no firm can charge extra price. Thus, B is correct.
C. There are no barriers to entry and exit in the market therefore no firm can earn abnormal profits in long run. Thus, C is correct.
Hence all the options given are characteristics of perfect competition.
the market price will decrease but the number of firms will increase.
A monopoly exists when there is one supplier of a particular good or service in the market. A monopolistic firm has full control of the market, and therefore sets the price and the supply of a good or service. Typically a monopoly usually selects a higher price and also lesser quantity of output to be supplied. There is also a high barrier to entry.
When the government dissolves the monopolist, and the market becomes competitive, this will lead to more firms coming into the market. As a result of more firms coming to the market, there'll be cheaper price of goods. The market price which is determined by the forces of demand and supply will decrease.
A) The coffee market includes a small number of firms.
Collusion in business refers to an illegal cooperation between competitors in order to disrupt the market's equilibrium. Competitors should be competing against each other, not making agreements between them to reduce competition.
Collusion generally harms smaller competitors and consumers, that is why it is considered illegal.
answer; by looking at total product,marginal product,and changes in both after changes in inputs