Question

There are more than 20 stores on a street in Sao Paulo that specialize in selling the same quality and brand of wheat products. An individual seller cannot charge more than the going market price without the risk of losing business to the other stores. What type of market does this example represent?

Answer 1

Answer:

Pure competition

Explanation:

Pure competition is a market structure characterized by many competitors selling similar products. Due to the high competition, market forces dertermine prices. Pure competition is also referred to as perfect competition. The other features of pure competition include.

1. There many buyers and many sellers who have access to market information
2. There are barriers no entry and exit in the market
3. Firms sell homogeneous products
4. Firms cannot influence the market price. Firms are price takers.
5. The units of production such are homogeneous and are freely moving.