Competition thrives with easy entry and many participants

Steps:

• Identify competition as rivalry among sellers driving prices down and innovation up.
• Recall that barriers to entry limit new firms, reducing rivalry.
• Note that more sellers increase pressure to compete on price and quality.
• Combine factors: low barriers allow many sellers, maximizing competition.

Why D is correct:

• In economics, perfect competition— the most competitive market structure—features low barriers to entry and many sellers, ensuring no single firm dominates (per market structure theory).

Why the others are wrong:

• A: High barriers and few sellers create monopoly or oligopoly, limiting competition.
• B: High barriers prevent many sellers, leading to concentrated markets with less rivalry.
• C: Low barriers with few sellers suggest temporary conditions, but few sellers still allow collusion over competition.

Final answer: D