WBCS.LIVE practice question

Which of the following market structures is fundamentally characterized by an individual firm being a "price taker"?

Solve this multiple-choice question and check the correct answer with its explanation below.

Answer options

  1. Monopoly
  2. Perfect Competition
  3. Oligopoly
  4. Monopolistic Competition

Correct answer and explanation

Correct answer: Perfect Competition

Explanation: āœ… Correct Answer: B) Perfect Competition šŸ“š Explanation: In a perfectly competitive market, individual firms have absolutely no control over the market price of their homogenous products. Because there are a massive number of buyers and sellers, an individual firm is strictly a "price taker." The prevailing market price is entirely determined by the broader macroeconomic forces of aggregate demand and supply.