Multiple Choice
Which of the following is one of the most common ways a company can decrease supplier power in a competitive market?
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3. The Market Forces of Supply and Demand
Competitive Markets
Multiple Choice
Which of the following markets is considered perfectly competitive?
A
The wheat market
B
The smartphone market
C
The electricity market with a single provider
D
The automobile market
Verified step by step guidance1
Step 1: Understand the characteristics of a perfectly competitive market. These include: many buyers and sellers, homogeneous (identical) products, free entry and exit from the market, perfect information, and no single buyer or seller can influence the market price.
Step 2: Analyze the wheat market. Wheat is a standardized agricultural product with many producers and buyers, and no single producer can influence the price. Entry and exit are relatively easy, making it a good example of a perfectly competitive market.
Step 3: Analyze the smartphone market. Smartphones are differentiated products with brand loyalty, and a few large firms dominate the market, so it does not meet the criteria for perfect competition.
Step 4: Analyze the electricity market with a single provider. A single provider means a monopoly, which is the opposite of perfect competition because there is only one seller controlling the price.
Step 5: Analyze the automobile market. Automobiles are differentiated products with significant brand differences and high barriers to entry, so this market is not perfectly competitive.
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