ECONOMICS
COMPETITION AND MARKET STRUCTURES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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True-there are markets where people only consider price
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FALSE-there are examples that come close, but there are no markets where price is the ONLY factor
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Either A or B
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None of the above
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Detailed explanation-1: -What Is an Example of Perfect Competition? Consider a farmers market where each vendor sells the same type of jam. There is little differentiation between each of their products, as they use the same recipe, and they each sell them at an equal price.
Detailed explanation-2: -Description: Ideally, perfect competition is a hypothetical situation which cannot possibly exist in a market. However, perfect competition is used as a base to compare with other forms of market structure. No industry exhibits perfect competition in India.
Detailed explanation-3: -Markets for agricultural products like rice, wheat etc resemble perfectly competitive markets because there are a large number of producers, free entry and exit and products are identical.
Detailed explanation-4: -If a market is perfectly competitive, then the market demand curve must be infinitely price elastic. If the firms in an industry are price takers, then every firm in the industry faces a horizontal demand curve. Firms that sell commodities on markets that are imperfectly competitive face downward-sloping demand curves.