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Which of the following is the primary requirement for a market to be competitive? A) High...

Which of the following is the primary requirement for a market to be competitive?

A) High barriers to entry

B) A horizontal demand curve

C) Low barriers to entry and relatively easy exit

D) A downward sloping demand curve

In competitive price-searcher markets, entrepreneurs have _____(a disincentive or an incentive) to discover and develop new products.

Suppose that a price searcher is currently charging a price that maximizes the firm's total revenue. Assume that marginal costs are always positive. This price ____(would or would not) maximize the firm's profits.

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Answer #1

C) Low barriers to entry and relatively easy exit
(Ease of entry and exit is the primary requirement for a market to be competitive.)

In competitive price-searcher markets, entrepreneurs have an incentive to discover and develop new products.
(This would increase their profits.)

Suppose that a price searcher is currently charging a price that maximizes the firm's total revenue. Assume that marginal costs are always positive. This price would not maximize the firm's profits.
(This would not maximize profits because profit maximization rquires equality of MR and MC.)

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