Question

Which kind of market does not need selling costs?

Answer 1

Perfect Competition is the type of market that does not require any selling cost.

1. All firms sell homogeneous (identical) products.
2. Buyers already have full knowledge about the products and prices.
3. Firms are price takers, not price makers.
4. There is free entry and exit in the market.
5. No advertising or promotion is needed because:
   • One firm’s product is exactly the same as another’s.
   • Customers make purchases based solely on price.

Therefore, selling costs (like advertisements, discounts, promotions, etc.) are unnecessary.