Final answer:
The statement about open bidding is false as owners can set qualifications for contractors, ensuring technical and financial capabilities. Prequalification processes are common to filter potential bidders in order to enter into contracts with capable parties.
Step-by-step explanation:
The statement given about open bidding is false. While open bidding does involve a process where many sellers and buyers can participate in the market, it does not mean that the owner of a project cannot set qualification standards to ensure the technical and financial capabilities of the contractors. Typically, in such bidding processes, it is common to require prequalification of bidders, which might include financial records, past project performance, and other relevant credentials. This prequalification ensures sellers, in this case, contractors, are well informed and capable of delivering on their contracts.
In a fully competitive market model, based on economic theory, many sellers and buyers participate and are able to freely enter and exit the market. Sellers offer identical products or services and are well informed about the products, including market conditions. However, when it comes to contractual work like construction, it's standard for owners to require certain qualifications to be met. This means they do have the right, and often use it, to restrict bids to only those who can demonstrate capability. Thus, the owner's right includes the ability to enter into contracts with parties they deem fitted, often determined through a prequalification process.