Question

The market for corn in Brazil has a large number of sellers and there is no difference in the products sold by each seller. As there are also a large number of buyers for corn, the actions of a single seller or buyer cannot affect the price. The market for corn in Brazil can be described as ____.
a. monopolistic competition
b. pure competition
c. an oligopoly
d. a monopoly
e. modified competition

Answer 1

Answer:

Option (b) is correct.

Explanation:

In a market condition of pure competition, there are large number of buyers and sellers of the product. The sellers in this market condition are behaving like a price taker.

If a single firm wants to increase the price of the product then as a result the demand for their product is reduced or become zero.

There are some characterstics of the firms under pure competition market condition:

(i) They are selling homogeneous products.

(ii) Price taker firms

(iii) Large no. of buyers and sellers