Question

A seller cannot influence the market price under (choose the correct alternative)

a) Perfect competition

b) Monopoly

c) Monopolistic competition

d) All of the above 

Answer 1

Perfect competition

A seller cannot influence the market price under perfect competition because, in a perfectly competitive market, the buyers will treat the products of all the firms in the market as homogeneous. There is zero degree of product differentiation and the firm cannot take any control of the price. Here, the firm does not involve in advertisement and sales promotion activities. Hence, uniform price prevails in a perfectly competitive market for homogeneous products.