Competitive Market.
Explanation of Solution
A competitive market refers to a market where there are many buyers and many sellers of an identical product and each of whom has little or no impact on the market price. Market price in a competitive market is determined by the demand and supply of the product. However, there are other markets that are not perfectively competitive. For instance, in the
Concept Introduction:
Competitive Market: It refers to the market in which there are many buyers and many sellers of an identical product so that each has a negligible impact on the market price.
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Chapter 4 Solutions
Principles of Economics, 7th Edition (MindTap Course List)
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- Which of the following describes a supply curve?arrow_forwardIn 2020 the UK government introduced a sales tax on all products bought online from overseas. Please note this is not a tariff – it is a tax. The tax will be 2% of the value of the products sold in the UK. This tax is collected from online sellers such as Amazon or ebay. Source: BBC (2019). See link: https://www.bbc.com/news/business-50656106 Consider the market for online products. The initial market equilibrium is at 10 million products sold per year at an average price of $500 each. Then, the UK government imposes a tax on the market, collected from sellers (for example Amazon and ebay). The tax is 2% per item (each item has an average price of $500). Show the effect of this on the market for online products. Show the effect on consumers of online products, on the online sellers and on the government. Does the UK economy gain or lose as a result of the tax? Explain why. Use a diagram to support your answer.arrow_forward
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