Question

Competitive behavior and competitive market structure are, in general, _____ related.

• A. directly
• B. inversely
• C. not related at all
• D. both a and b

Answer 1

The correct option is B inversely

Competitive behavior and competitive market structure are, in general, inversely related; the more competitive the market structure, less competitive is the behavior of the firms. We see that Coke and Pepsi compete with each other in a variety of ways to achieve a higher level of sales or a greater share of the market. Conversely, we do not find individual farmers competing among themselves to sell a larger amount of crop. This is because both Coke and Pepsi possess the power to influence the market price of soft drinks, while the individual farmer does not.