Which of the following is NOT a typical characteristic of a competitive market system?

• A. Products are largely homogeneous
• B. Firms are price takers
• C. There are many buyers and sellers
• D. Barriers to entry are high

Answer: (D)

Verified step by step guidance

1. Step 1: Understand the characteristics of a competitive market system. Typically, a competitive market has many buyers and sellers, homogeneous products, firms that are price takers, and free entry and exit (low barriers to entry).
2. Step 2: Analyze each option given in the problem to see if it aligns with these characteristics:
3. Step 3: 'Products are largely homogeneous' fits the competitive market definition because products are similar, so consumers see them as substitutes.
4. Step 4: 'Firms are price takers' is also a key feature since no single firm can influence the market price due to competition.
5. Step 5: 'There are many buyers and sellers' is another hallmark of competitive markets, ensuring no single participant controls the market.
6. Step 6: 'Barriers to entry are high' contradicts the competitive market model because high barriers prevent new firms from entering, reducing competition. Therefore, this is NOT a typical characteristic of a competitive market.