The market for breakfast cereal contains hundreds of similar products, such as Fruit Loops, Corn Flakes, and Rice Krispies, that are considered to be different products by different buyers. This situation violates the perfect competition assumption of:
A) many buyers and sellers.
B) identical goods.
C) complete information.
D) ease of entry and exit.

Question

Quizplus · Accepted Answer

The perfect competition assumption of identical goods is violated in the market for breakfast cereal since there are hundreds of similar products that are differentiated in the eyes of different buyers.

The Market for Breakfast Cereal Contains Hundreds of Similar Products