In a market where all goods are perfect substitutes for each other,
A) the price elasticity of demand is 1.0 for all goods
B) the market is perfectly competitive
C) only one producer dominates
D) only a few firms can operate
E) brand loyalty is high

Question

Quizplus · Accepted Answer

In a market where all goods are perfect substitutes, the market is perfectly competitive because consumers can easily switch from one product to another without any loss of utility, leading to intense competition among sellers to offer the best price and quality.

In a Market Where All Goods Are Perfect Substitutes for Each