Question

how is price determined in a competitive market?
select an answer
a. a single, market price is jointly set after a meeting of all sellers in the market
b. the market price is arbitrary, and no one knows how it is determined.
c. a single, market price is determined by market supply and demand.
d. a single, market price is set by the market leader and then copied by other sellers.

Explanation:

In a competitive market, no single seller or group of sellers has the power to set prices. The market price emerges from the interaction of all buyers (demand) and sellers (supply), reaching equilibrium where quantity supplied equals quantity demanded. Options A, B, and D are incorrect: sellers don't collude to set prices, the price is not arbitrary, and there is no market leader setting prices in a perfectly competitive market.

Answer:

C. A single, market price is determined by market supply and demand.