Practice Quiz

AP Microeconomics

Category - Microeconomics

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Which of the following is not one of the characteristics of a competitive market?
  1. All of the products in all of the businesses are pretty much the same
  2. Information about all products and their prices is readily available to everyone
  3. Businesses cannot freely enter or exit the market
  4. There are enough participators in the market that no one business can influence the price of the product
Explanation
Answer - C - In a competitive market, businesses can freely enter or exit the market; therefore, option C is not one of the characteristics of a competitive market.

Key Takeaway: In perfect competition, no one business is powerful enough to influence price, allowing everyone to have a share of the income. Additionally, all products being produced and sold are pretty much the same, businesses can enter or exit the market as they please, and information about prices and products being sold is extremely transparent.
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