Question

If a Florida strawberry wholesaler operates in a perfectly competitive market, that wholesaler will have a ________ share of the market, and consumers will consider her strawberries to be ________. Therefore, ________ advertising will take place in this market.

a] large; standardized (commodity); no
b] small; standardized (commodity); little, if any
c] small; differentiated; no
d] large; differentiated; extensive

Answer 1

b) small; standardized (commodity); little, if any

Step-by-step explanation:

A perfectly competitive market form is characterized by following attributes:

1. Large number of buyers and sellers: The number of buyers and sellers are so large that no single firm can exert any perceptible influence on the prices.
2. Homogeneous products: The producers produce such products which are exactly identical in terms of shape, size, color, etc.
3. Freedom of entry and exit: There are no entry barriers i.e new firms can enter and loss making firms can freely exit the industry.
4. Price Takers: Prices in such form of market are determined by the interaction of market forces of demand and supply and each firm represents a price taker.

Thus, in the given case, the strawberry wholesaler who operates in such a market form will have a small, insignificant share of the market output. The product in the market i.e strawberry being same i.e standardized and there is little scope for advertising since all the sellers produce same products with none exerting substantial influence on the prices and with no consumer willing to pay a higher price.