Answer to Question #205870 in Economics for Kavida

Question

A small farmer is more likely to operate in a perfectly competitive market than a company like AB inBev because?

a) a small business is more likely to keep close control on costs than a large firm.

b) AB inBev employs many people, whereas perfectly competitive firms are owner-managed.

c) the demand for beer is less elastic than the demand for food.

d) a small farmer supplies a small share of market supply.

Answer 1

A small farmer is more likely to operate in a perfectly competitive market than a company like AB inBev because a small farmer supplies a small share of market supply, but AB inBev is a large firm with much more larger market share and as a result market power to set the price.

So, the correct answer is d).