Question

Provide your perspective on the following: What are the main characteristics of a perfectly competitive market that cause buyers and sellers to be price takers? Explain. How “perfectly” competitive do you think are the following markets: (1) stock market, (2) bond market, (3) foreign exchange market, (4) world sugar market, and (5) world oil market? Explain.

Answer 1

A perfectly competitive firm is a price taker, which means that it must accept the equilibrium price at which it sells goods.Perfect competition occurs when there are many sellers, there is easy entry and exiting of firms, products are identical from one seller to another, and sellers are price takers.

1)The stock market is perfectively competitive because it has homogeneity of goods. Buyers can purchase the good from any seller and receive the same good. Price taking occurs only in perfectly competitive markets.

2)bond market is not perfectly compititive.

3)ll that means is currencies have no intrinsic value. Today, most currencies values are determined through supply and demand on the foreign exchange market. This is called a floating exchange rate. ... That's part of the reason why the foreign exchange markets aren't exactly perfectly competitive.

4)Sugar Industry is one of the closest paragons of perfect competition in the real world. With innumerable producers of sugars across the markets

5)The oil market oscillates a perfectly competitive market