1. Sort the list below according to whether or not an item is an assumption made

Question

1. Sort the list below according to whether or not an item is an assumption made under perfect competition (aka pure competition or competitive industry).

Assumed in perfect Competition------------------Not Assumed in perfect Competition

-A small number of producers

-Significant barriers to entry

-Many buyers

-Firms selling similar but different goods

-Price taking behavior

2. Listed below are the markets for several products. Sort the different markets according to whether or not they are consistent with the assumptions of perfect (or pure) competition. Be sure to place all of the items.

Perfect or Pure Competition-------------------Not Perfect or Pure Competition

-The market for cars

-The market for pizza in a large city

-The marker for corn

-The market for dollars

-The market for designer shoes

-The market for 14 karat gold

Explanation / Answer

1.-A small number of producers--Not Assumed in perfect Competition

-Significant barriers to entry--Not Assumed in perfect Competition

-Many buyers--Assumed in perfect Competition

-Firms selling similar but different goods--Not Assumed in perfect Competition

-Price taking behavior--Assumed in perfect Competition

2.-The market for cars-Not Perfect or Pure Competition

-The market for pizza in a large city-Not Perfect or Pure Competition

-The marker for corn-Perfect or Pure Competition

-The market for dollars-Perfect or Pure Competition

-The market for designer shoes-Not Perfect or Pure Competition

-The market for 14 karat gold- Perfect or Pure Competition

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