Microeconomics
Microeconomics
2nd Edition
ISBN: 9781259813337
Author: KARLAN, Dean S., Morduch, Jonathan
Publisher: Mcgraw-hill Education,
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Chapter 3, Problem 1RQ
To determine

To find: a competitive market and explain all of its features.

Expert Solution & Answer
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Explanation of Solution

The market for wheat is a competitive market because it has all the characteristics of a competitive market.

The buyer and seller of wheat have complete information about the prices and quality of wheat. The wheat sold by each seller is standardized and has the same features.

Buying wheat does not include any transaction cost. Moreover, neither the buyer nor the seller can influence the market price of wheat. Thus, both buyers of the wheat and sellers of the wheat are price takers.

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