Which of the following products most closely resembles pure competition?

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

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the characteristics of a purely competitive market. These include many buyers and sellers, homogeneous (identical) products, free entry and exit, and perfect information.
2. Step 2: Analyze each product option against these characteristics. For example, automobiles and smartphones are differentiated products with fewer sellers, so they do not fit pure competition.
3. Step 3: Consider electricity from a local utility, which is typically a monopoly or a regulated market, not pure competition.
4. Step 4: Wheat is a standardized agricultural product with many producers and buyers, making it a good example of a purely competitive market.
5. Step 5: Conclude that wheat most closely resembles pure competition because it meets the key criteria of many sellers, identical products, and easy market entry.