Answer to Question #242656 in Economics for Tenn

Question

Consider the following goods and services. Which are the most likely to be produced in a perfectly competitive industry? Which are not? Explain why you made the choices you did, relating your answer to the assumptions of the model of perfect competition. Please address all of the examples below in your discussion.

1. Coca-Cola and Pepsi

2. Potatoes

3. Private physicians in your local community

4. Government bonds and corporate stocks

5. Taxicabs in Lima, Peru—a city that does not restrict entry or the prices drivers can charge

6. Oats

Answer 1

Potatoes, taxicabs in Lima and oats are most likely to be produced in a perfectly competitive industry, because they are homogeneous enough, and there are a lot of producers of these goods. The other are less likely to be produced in a perfectly competitive industry.