Which of the following is an example of a firm producing multiple products in a competitive market?

• A. A wheat farmer who only grows wheat
• B. A gas station selling only gasoline
• C. A bakery that sells both bread and pastries
• D. A monopolist selling a single brand of soda

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the concept of a competitive market. In microeconomics, a competitive market is characterized by many firms selling similar or identical products, with no single firm able to influence the market price significantly.
2. Step 2: Identify what it means for a firm to produce multiple products. This means the firm offers more than one distinct good or service to consumers, diversifying its product line.
3. Step 3: Analyze each option to see if it fits both criteria: operating in a competitive market and producing multiple products.
4. Step 4: The wheat farmer and gas station each produce or sell only one product, so they do not meet the multiple products criterion.
5. Step 5: The bakery sells both bread and pastries, which are different products, and typically operates in a competitive market with many similar bakeries, making it the correct example.