Question

The market for breakfast cereal contains hundreds of similar products, such as Froot Loops, cornflakes, and Rice Krispies, that are considered to be different products by different buyers. This situation violates the perfect competition assumption of:__________ a) many buyers and sellers. b) ease of exit. c) ease of entry. d) a standardized product.

Answer 1

d) a standardized product.

Step-by-step explanation:

The market for breakfast cereal contains many buyers and sellers (most people buy cereal for breakfast at least one per year, and there are many companies that produce cereal), ease of exit, ease of exit, but it does not have standarized products that are perfect substitutes for each other. For this reason, this makert is not perfectly competitive (although it is certainly close).

While Froot Lopps, Cornflakes, and Rice Krispies are very similar products, they are not the same for consumers. The simple fact that Froot Loops have different shapes and flavors than classical cornflakes means for many consumers that buying either one of the other is a matter of preference, not necessarily of cost alone.