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

• A. Electricity utilities
• B. Automobile manufacturing
• C. Cell phone service providers
• 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, and perfect information.
2. Step 2: Analyze each option to see if it fits these characteristics. For example, electricity utilities often have few providers and are regulated, so they are not perfectly competitive.
3. Step 3: Consider automobile manufacturing, which has few large firms and differentiated products, so it is not perfectly competitive.
4. Step 4: Look at cell phone service providers, which usually have limited competition and differentiated services, so they are not perfectly competitive.
5. Step 5: Recognize that wheat farming typically involves many small producers selling a homogeneous product with easy market entry and exit, fitting the model of perfect competition.