Which of the following is an example of a perfectly competitive market?

• A. The automobile industry
• B. The airline industry
• C. The market for wheat
• D. The smartphone market

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the characteristics of a perfectly competitive market. These include many buyers and sellers, homogeneous products, free entry and exit, perfect information, and no single buyer or seller can influence the market price.
2. Step 2: Analyze each option against these characteristics. For example, the automobile industry and smartphone market have differentiated products and fewer sellers, which means they are not perfectly competitive.
3. Step 3: Consider the airline industry, which has a limited number of firms and significant barriers to entry, so it does not meet the criteria for perfect competition.
4. Step 4: Evaluate the market for wheat, which typically has many sellers offering a homogeneous product, easy entry and exit, and buyers and sellers are price takers, fitting the model of perfect competition.
5. Step 5: Conclude that the market for wheat is the best example of a perfectly competitive market among the given options.