Question

Assignment Details

Please draw on your experiences and what you have observed to address the following questions and topics.

Choose a market for a good in your area that seems to be a perfectly competitive market. Perfect competition is useful in analyzing real-world markets, even though there are very few, if any, that match the characteristics of the perfect competition model. Answer the following questions to describe the market, and describe how competitive the market you have chosen is:

What good or service is provided in this market?

Who are the buyers and who are the sellers in the market?

Are there many sellers in the market?

Are there very many substitutes for the good or service?

If the store where you usually buy this item raised its prices, would you go to another store or switch products? Explain.

Do you think that this a competitive market? Explain.

Answer 1

1.

This is a market that produces agricultural products such as grains and pulses. It exhibits perfect competition.

2.

Buyers are retail consumers who buy these products to consume and firm who use these products as intermediate goods to produce processed food. Sellers, are the farmers, producers or mediator firms.

3.

Yes, there are many sellers in the market. These sellers are the agricultural producers.

4.

There are homogeneous products as well as substitutes in the market.

5.

I will go to another store to buy the same product. I will get the product at the same price as of old. It exhibits the perfect competition characteristics. If other store also keeps higher price, then I can opt for the other substitutes so that i get the product in the same budget.

6.

Yes, it is a competitive market, because firms are the price takers and products are homogeneous in nature. Further, large number of sellers are also present who can come in or move out of the market.