DECA Sports and Entertainment Marketing Practice Exam

Which of the following is NOT a characteristic of competition in a free market?

1. Struggle for resources

2. Variety of choices for consumers

3. Collusion among firms

4. Innovation driven by consumer demands

The correct answer is: Collusion among firms

Collusion among firms is not typically a characteristic of competition in a free market because a free market encourages independent decision-making where various firms compete against each other for consumers' business. In a competitive market, firms operate autonomously, leading to a dynamic environment characterized by rivalry, price competition, and innovation. The struggle for resources refers to the competition among firms to secure the necessary inputs for production and can lead to more efficient allocation of resources. The variety of choices for consumers is a hallmark of competitive markets, as multiple businesses strive to meet consumer needs, resulting in diverse products and services. Additionally, innovation driven by consumer demands fosters advancement within the market, as companies work to differentiate themselves and capture consumer interest. In contrast, collusion undermines the principles of free market competition by reducing the incentives for innovation and limiting choices available to consumers.