Which of the following markets is considered perfectly competitive?

• A. The wheat market
• B. The smartphone market
• C. The electricity market with a single provider
• D. The automobile market

Answer: (A)

Verified step by step guidance

1. Step 1: Understand the characteristics of a perfectly competitive market. These include: many buyers and sellers, homogeneous (identical) products, free entry and exit from the market, perfect information, and no single buyer or seller can influence the market price.
2. Step 2: Analyze the wheat market. Wheat is a standardized agricultural product with many producers and buyers, and no single producer can influence the price. Entry and exit are relatively easy, making it a good example of a perfectly competitive market.
3. Step 3: Analyze the smartphone market. Smartphones are differentiated products with brand loyalty, and a few large firms dominate the market, so it does not meet the criteria for perfect competition.
4. Step 4: Analyze the electricity market with a single provider. A single provider means a monopoly, which is the opposite of perfect competition because there is only one seller controlling the price.
5. Step 5: Analyze the automobile market. Automobiles are differentiated products with significant brand differences and high barriers to entry, so this market is not perfectly competitive.