Which market structure is characterized by a number of firms selling identical products at the same price?

Which market structure is characterized by a number of firms selling identical products at the same price?

• A. Monopoly
• B. Monopolistic Competition
• C. Perfect Competition
• D. Oligopoly

Answer: (C)

The market structure characterized by a number of firms selling identical products at the same price is known as perfect competition. In perfect competition, numerous small firms compete against each other, and no single firm has any significant market power. This means that all firms in the market accept the market price as given and cannot influence it because the products they sell are homogeneous, or identical in nature. In this structure, consumers perceive no difference between the products offered by different sellers, leading to a situation where price is determined entirely by supply and demand dynamics in the market. Since firms are unable to set their own prices, they must sell their products at the prevailing market price, ensuring that competition is based on quantity rather than price manipulation. This contrasts with other market structures such as monopolies, where a single firm dominates the market and sets its own prices, and monopolistic competition, where products are differentiated and firms can have some degree of pricing power. Oligopolies consist of a few firms that may sell similar or identical products, but they often have significant influence over market prices through collusion or competitive behaviors. Thus, the defining characteristics of perfect competition are what solidify it as the correct answer.

The market structure characterized by a number of firms selling identical products at the same price is known as perfect competition. In perfect competition, numerous small firms compete against each other, and no single firm has any significant market power. This means that all firms in the market accept the market price as given and cannot influence it because the products they sell are homogeneous, or identical in nature.

In this structure, consumers perceive no difference between the products offered by different sellers, leading to a situation where price is determined entirely by supply and demand dynamics in the market. Since firms are unable to set their own prices, they must sell their products at the prevailing market price, ensuring that competition is based on quantity rather than price manipulation.

This contrasts with other market structures such as monopolies, where a single firm dominates the market and sets its own prices, and monopolistic competition, where products are differentiated and firms can have some degree of pricing power. Oligopolies consist of a few firms that may sell similar or identical products, but they often have significant influence over market prices through collusion or competitive behaviors. Thus, the defining characteristics of perfect competition are what solidify it as the correct answer.