Question

Which of the following are likely to be examples of perfect competition where the seller is a price taker? (There is more than one correct answer - select all.) Porsche selling its cars. Lachelle selling 100 shares of stock. A farmer selling 100 bushels of corn. An art collector selling a Picasso. Apple selling a new watch. A local dairy farmer selling milk.

Answer 1

The correct answers are:

Lachelle selling 100 shares of stock

A farmer selling 100 bushels of corn

A local dairy farmer selling milk

Step-by-step explanation:

To begin with, a perfect competition market is the one whose characteristics are the following: to have an homogeneous product; to have a lot of consumers and sellers as well so that they both are price takers given the forces of the market; to have transparent and clean information available for every consumer; there are not legal barriers at the entry or either at the exit for the companies.

Secondly, those situation are given in a perfect competitive market because they all have those characteristics. They are markets with homogeneous products and a lot of sellers and consumers as well.