Which of the following markets is most likely to be perfectly competitive?

• A. Cell phone service providers
• B. Automobile manufacturing
• C. Electricity utilities
• D. Wheat farming

Answer: (D)

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 market option against these characteristics. For example, cell phone service providers and automobile manufacturing have few sellers and differentiated products, which do not fit perfect competition.
3. Step 3: Consider electricity utilities, which often have high barriers to entry and are usually regulated monopolies or oligopolies, so they are not perfectly competitive.
4. Step 4: Examine wheat farming, which typically involves many small producers selling a homogeneous product with relatively easy entry and exit, fitting the criteria for perfect competition.
5. Step 5: Conclude that wheat farming is the market most likely to be perfectly competitive based on the alignment with the defining characteristics of perfect competition.