Question

______ occurs when there are many buyers and sellers of products that are almost equal and any seller can easily enter and/or exit the market.

a. monopolistic competition
b. perfect competition
c. a duopoly
d. a monopoly
e. an oligopoly

Explanation:

To solve this, we analyze each market structure:

• A. Monopolistic Competition: Has many firms with differentiated products; entry/exit is relatively easy but products aren’t “almost equal.”
• B. Perfect Competition: Defined by many buyers/sellers, homogeneous (almost equal) products, and free entry/exit. This matches the description.
• C. Duopoly: Only 2 sellers, so not “many.”
• D. Monopoly: One seller, no competition.
• E. Oligopoly: Few sellers, barriers to entry.

Answer:

B. Perfect competition