In a purely competitive market structure, which group is most likely to benefit the most?

• A. Government agencies, as they can control market outcomes
• B. Suppliers with significant market power, since they can restrict output
• C. Consumers, due to lower prices and greater product availability
• D. Monopolists, because they can set prices above marginal cost

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the characteristics of a purely competitive market. In such a market, there are many buyers and sellers, products are homogeneous, and no single participant can influence the market price.
2. Step 2: Recognize that in perfect competition, firms are price takers, meaning they accept the market price determined by supply and demand, leading to efficient allocation of resources.
3. Step 3: Analyze the impact on different groups: Government agencies do not control market outcomes here; suppliers cannot restrict output due to competition; monopolists do not exist in this structure.
4. Step 4: Identify that consumers benefit the most because competition drives prices down to marginal cost, increasing product availability and consumer surplus.
5. Step 5: Conclude that the group most likely to benefit in a purely competitive market is consumers, due to lower prices and greater product availability.