The model of competitive markets relies on these three core assumptions:

1. there must be many buyers and sellers�a few players can't dominate the market.
2. firms must produce an identical product�buyers must regard all sellers' products as equivalent.
3. firms and resources must be fully mobile, allowing for free entry into and exit from the industry.
the first two conditions imply that all consumers and firms are price takers. while the third is not necessary for price-taking behavior, assume for this problem that a market cannot maintain competition in the long run without free entry.

identify whether or not each of the following scenarios describes a competitive market, along with the correct explanation of why or why not.

The three scenarios describe a competitive market.

Explanation:

1) In the competitive market buyers and sellers are price takers, this means that there are many producers and consumers and none of them are able to intervene in price and market. Price is given, ie price is determined by interaction in the market. 2) The products are identical. That is, no company will make a profit due to differentiated products. In perfect competition, companies produce identical products, and the consumer is indifferent to the product characteristics of each company. 3) There is free entry and exit of companies and factors of production, ie there is no cost to enter and exit any sector. This means that factors can migrate from one sector to another without incurring costs, meaning there are no barriers to entry and exit from any sector.

Thus, from items 1 and 2, consumers and buyers are price takers, that is, they cannot influence the price determined by the market. Item 3 is about achieving zero profit or normal long-term profit. This is because the free entry and exit of companies avoids extraordinary profits by encouraging companies to migrate to sectors that earn higher profits in the short term. Thus, in perfect competition, compa

answer: b 56, 250

explanation: