Which of the following goods is most likely to be sold in a perfectly competitive market?

• A. Smartphones
• B. Designer clothing
• C. Wheat
• D. Electricity from a local utility

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, and perfect information.
2. Step 2: Analyze each good based on these characteristics. For example, smartphones and designer clothing are differentiated products with brand loyalty, so they do not fit the homogeneous product criterion.
3. Step 3: Consider wheat, which is a standardized agricultural product with many sellers and buyers, making it a good example of a homogeneous product in a competitive market.
4. Step 4: Evaluate electricity from a local utility, which is typically a natural monopoly due to high infrastructure costs and limited competition, so it does not fit the perfectly competitive market model.
5. Step 5: Conclude that wheat is most likely sold in a perfectly competitive market because it meets the key criteria of many sellers, homogeneous product, and easy market entry.