Suppose that automobile buyers in the southern part of a town have no idea what prices are being paid in the northern part of town. This situation violates the perfect competition assumption of:
A) many buyers and sellers.
B) identical goods.
C) complete information.
D) no discrimination.

Question

Quizplus · Accepted Answer

The perfect competition assumption of complete information is violated in this situation because buyers in the southern part of town are not aware of the prices being paid in the northern part of town. This lack of knowledge could potentially result in differences in prices and bargaining power among buyers and sellers, leading to an imperfectly competitive market.

Suppose That Automobile Buyers in the Southern Part of a Town