Question

Several corn farmers in Iowa meet with their friends each week for breakfast. They talk about their families and about the weather. But soon they engage in more serious discussions about the future demand for corn, the latest prices being offered for their crop, and the cost of their seeds, fertilizer, and machinery.
Which characteristic of a purely competitive market BEST fits the scene described above?
A. Many sellers participate in the market.
B. Sellers offer identical products.
C. Buyers and sellers are well informed about products.
D. Sellers are able to enter and exit the market easily.

Answer 1

Answer:

Option C                            

Explanation:

The given options are all related to the competitive market structure however the given case most closely relates to the well informed buyer and seller characteristic of the perfectly or pure competitive market.

Under this characteristic, the buyers have the full knowledge and gains maximum profit by burning the product. Similarly seller has the complete knowledge of how to maximize the utility by selling the product.