Future Business Leader Achievments (FBLA) Economics Practice Exam

A market characterized by many sellers and standardized products is referred to as:

1. A monopoly

2. An oligopoly

3. A perfect competition

4. A cartel

The correct answer is: A perfect competition

The characterization of a market with many sellers and standardized products aligns perfectly with the definition of perfect competition. In a perfectly competitive market, numerous participants engage in buying and selling identical goods, which ensures that no single seller can influence the market price. This results in a situation where the price is determined by overall supply and demand in the market, and market participants are price takers. In contrast, a monopoly involves a single seller dominating the market for a unique product, while an oligopoly features a few sellers who may offer differentiated products or work together, potentially impacting market prices and competition. A cartel refers specifically to a group of businesses that collude to control prices and limit competition in a market, significantly deviating from the principles of standardization and competition inherent in perfect competition. Therefore, the characteristics of many sellers and standardized products distinctly support the classification of perfect competition as the correct answer.