Log out Go to App
Go to App

Learning Materials

Features

Discover

Chapter 21: Problem 19

Perfect competition is (LO4) a) the prevalent form of competition in the United States b) the only form of competition in the United States c) found occasionally d) probably impossible to find

Short Answer

Expert verified
The correct answer is (c) "Found occasionally". This is because while perfect competition is largely a theoretical construct and difficult to find in its complete form, it is not entirely impossible. In the United States' marketplace, some industries such as agriculture come close to the conditions of perfect competition, making it a rare but occasionally observable phenomenon.

Step by step solution

01

Definition of Perfect Competition

Firstly, perfect competition is a theoretical market structure. It is characterized by the following: (1) all firms sell an identical product (2) all firms are price takers (3) all firms have a relatively small market share (4) buyers have complete information about the product being sold and the prices charged by each firm, and (5) the industry is characterized by freedom of entry and exit.
02

Evaluation of Option (a)

This statement indicates that perfect competition is the most common form of competition in the United States. While there are sectors where competition is robust, it would be incorrect to suggest that perfect competition, as defined theoretically, is the dominating market structure in the United States. Many industries are characterized by differentiated products, significant barriers to entry, and incomplete information; all indications of less than 'perfect' competition.
03

Evaluation of Option (b)

This statement suggests that perfect competition is the only form of competition in the United States. This would not be accurate because clear and observable market structures range from pure monopoly to monopolistic competition and oligopoly that all sit alongside instances of more 'perfect' competition.
04

Evaluation of Option (c)

The statement implies that perfect competition can be found occasionally in the United States' market. This is relatively accurate as some industries, like agriculture, can approach perfect competition more closely than others. However, there are very few, if any, industries that can fulfill every condition of the model of perfect competition.
05

Evaluation of Option (d)

This statement suggests that perfect competition is impossible to find. While a perfectly competitive market structure is largely a theoretical construct and difficult to find in its pure form, it is not completely impossible. There are industries, as previously mentioned, that closely align with the conditions of perfect competition.
06

Answer Selection

Based on the understanding of perfect competition and evaluating the validity of each statement in relation to real-world conditions, option (c) "Found occasionally" is the best answer. This is a more realistic representation of perfect competition's presence within the United States' marketplace.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

The marginal cost curve intersects the ATC curve at its (LO5) a) minimum point, which is the break-even point b) maximum point, which is the break-even point c) minimum point, which is the shut-down point d) maximum point, which is the shut-down point

A profit-maximizing firm will increase production when ( \(\mathrm{LO3})\) a) price is less than marginal cost b) price equals marginal cost c) price exceeds marginal revenue d) price exceeds marginal cost

When an industry is in long-run equilibrium economic profits are and will be entering or leaving the industry. (LO5) a) zero, some b) zero, none c) positive, some d) positive, none

The most efficient output (LO7) a) is always equal to the most profitable output for the perfect competitor b) is never equal to the most profitable output for the perfect competitor c) is equal to the most profitable output for the perfect competitor only in the long run d) is equal to the most profitable output for the perfect competitor only in the short run

At an output of \(5, \mathrm{MC}=\$ 49\) and ATC \(=\$ 52\). At an output of \(6, \mathrm{MC}=\$ 59\) and ATC \(=\$ 53\). At the breakeven point, ATC is (LO6) a) above \(\$ 53\) b) \(\$ 53\) c) between \(\$ 52\) and \(\$ 53\) d) \(\$ 52\) e) less than \(\$ 52\)
See all solutions

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free