Which of the following is a main feature of a competitive market economy?

• A. Barriers to entry prevent new firms from entering the market
• B. Many buyers and sellers with no single agent able to influence the market price
• C. Government sets prices for goods and services
• D. Firms have significant control over market supply

Answer: (B)

Verified step by step guidance

1. Understand the concept of a competitive market economy: it is characterized by many buyers and sellers, where no single participant can influence the market price significantly.
2. Identify the role of barriers to entry: in a competitive market, there are typically no significant barriers preventing new firms from entering or exiting the market.
3. Recognize the price-setting mechanism: in a competitive market, prices are determined by the forces of supply and demand rather than by government intervention or individual firms.
4. Analyze the market power of firms: in a competitive market, individual firms have little to no control over the market supply and must accept the market price as given.
5. Conclude that the main feature of a competitive market economy is the presence of many buyers and sellers with no single agent able to influence the market price.