A perfectly competitive market structure has key features.
- There are many buyers and sellers so neither side of the market has market power.
- The product provided to the market is identical across suppliers.
- There are no barriers to entry.
Give an example and describe an industry that would meet the conditions of a perfectly competitive market structure.
- How do individual firms in a perfectly competitive industry respond to an increase in the market demand for the product?
- How is price determined in this market structure?
- Would advertising by an individual firm in this type of market provide any benefits?