Business essentials 4 Familiarize yourself with a product or

4. Familiarize yourself with a product or service that is sold under conditions of pure competition. Explain

Solution

under pure competition, a homogenous product is sold with perfect substitutes available. The price is decided by the market and firm is just price taker.

There are no entry and exit barriers. There is no need of advertising of the product. All firms sell at same price.

Agriculture goods like wheat, fruits etc are close examples of this market.