Question

Which of the following arguments could be made as evidence that the market for produce sold at a farmers' market is perfectly competitive?

a. The U.S. Department of Agriculture has established standards for the labeling of organic produce sold at farmers' markets.

b. Sales of organically grown food have increased at a rate of 20 percent per year.

c. As more farmers began selling their products at farmers' markets, the increase in supply has driven down prices to the point where they just cover the cost of production.

d. The profits earned by farmers who sell their products at farmers' markets have continued to grow, despite the increasing number of farmers entering this market.

Answer 1

"C"

A perfectly competitive market will operate at a point where the price and the ATC are equal and that is the lowest point of the ATC, here, only the production cost is covered. the answer is "C".