Final answer:
The correct statements about competitive markets include that a single seller cannot influence prices in a perfectly competitive market and that such markets can exist for various economic entities. A competitive market isn't limited to services and prices aren't driven down to zero.
Step-by-step explanation:
Choosing the correct statements about competitive markets involves understanding the nature of perfect competition. In such a market:
- A single seller cannot influence the price, which aligns with statement 1.
- Competitive markets exist for goods, services, money, factors of production, and inputs, corresponding to statement 2.
- Statement 3 is incorrect because a competitive market can include both goods and services, not just services.
- Prices do not drop to zero due to competition, as costs of production still exist. This makes statement 4 incorrect.
In a perfectly competitive market, there are many firms producing identical products, and a large number of sellers and buyers. They all possess relevant information to make informed decisions, and there is free entry and exit from the market, which means firms are price takers. If you sell a product in a perfectly competitive market and are not happy with its price, you cannot raise the price, even by a cent, without risking losing all your customers.