Multiple Choice
Which of the following tend to result from strong competitive rivalry in competitive markets?
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3. The Market Forces of Supply and Demand
Competitive Markets
Multiple Choice
Which of the following markets is most likely to be perfectly competitive?
A
Cell phone service providers
B
Automobile manufacturing
C
Electricity utilities
D
Wheat farming
Verified step by step guidance1
Step 1: Understand the characteristics of a perfectly competitive market. These include many buyers and sellers, homogeneous products, free entry and exit, perfect information, and no single buyer or seller can influence the market price.
Step 2: Analyze each market option against these characteristics. For example, cell phone service providers and automobile manufacturing have few sellers and differentiated products, which do not fit perfect competition.
Step 3: Consider electricity utilities, which often have high barriers to entry and are usually regulated monopolies or oligopolies, so they are not perfectly competitive.
Step 4: Examine wheat farming, which typically involves many small producers selling a homogeneous product with relatively easy entry and exit, fitting the criteria for perfect competition.
Step 5: Conclude that wheat farming is the market most likely to be perfectly competitive based on the alignment with the defining characteristics of perfect competition.
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