Answered: In perfect competition: Select one: a.…

In perfect competition: Select one: a. Firms tend to spend a lot on advertising b. Products are heavily differentiated c. A few firms dominate the market d. There is little incentive for innovation

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

q16-

In perfect competition:

Select one:

Firms tend to spend a lot on advertising

Products are heavily differentiated

A few firms dominate the market

There is little incentive for innovation

Definition Definition Structure of the market that exists when many buyers and sellers exchange similar commodities and prices are fixed by market forces, demand, and supply. When there is perfect competition, a single business cannot impact the price or market value of the homogenous product.

Expert Solution

Step 1

In perfect competition, there are large number of firms producing homogeneous goods with no market power.

Since all firms produce homogeneous products, firms do not spend much on advertising.

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