Which of the following factors help determine the structure of a competitive industry?

• A. The existence of price floors
• B. The number of firms in the market
• C. The level of government subsidies
• D. The presence of monopolistic pricing

Answer: (B)

Verified step by step guidance

1. Understand that the structure of a competitive industry is primarily determined by characteristics related to market participants and their behavior, rather than external controls or policies.
2. Identify key factors that define market structure, such as the number of firms, product differentiation, ease of entry and exit, and the nature of competition among firms.
3. Recognize that the number of firms in the market directly affects competition intensity and market structure, distinguishing between perfect competition, monopolistic competition, oligopoly, and monopoly.
4. Note that price floors, government subsidies, and monopolistic pricing are external interventions or pricing strategies, which influence market outcomes but do not define the fundamental market structure itself.
5. Conclude that among the given options, the number of firms in the market is the primary factor that helps determine the structure of a competitive industry.