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One company does not dominate the other competitors in a perfectly competitive market. We have over 200 college courses that prepare you to earn credit by exam that is accepted by over 1,500 colleges and universities.You can test out of the first two years of college and save thousands off your degree.Try it risk-free Pure competition is a term that describes a market that has a broad range of competitors who are selling the same products. Here are some characteristics that define pure competition: To further illustrate pure competition, let's imagine that you are purchasing assorted color latex balloons.
Once the products are part of pure competition, the sellers of those products often have similar sales.
Because competition is much less intense in pure competition, new companies can easily enter the market and start selling products.
In pure competition, product prices are set by market demand, not by sellers.
Pure competition is an ideal economic scenario in which there are a large number of independent sellers and consumers, and the given product is in ready supply.
The following two examples help explain how pure competition could exist.
If several gas stations exist within close proximity with each other and have matching prices, equal services, and sell relatively similar amounts of gas, they could be operating in a purely competitive market.As a member, you'll also get unlimited access to over 79,000 lessons in math, English, science, history, and more.Plus, get practice tests, quizzes, and personalized coaching to help you succeed.All the prices are equal, and in the end, the balloons are the same.While it is almost impossible to have a completely pure competition market, there are instances when pure competition is in effect.There are five different brands of 10-inch assorted color balloons, and they are all priced at 99 cents per package.Because you have no preference for one brand over another, and the packaging is generic on each brand, you randomly select a package.Sellers are unable to decrease the price of a product because it is so readily available from competitors, and consumers are unable to decrease it because there is such wide demand.Most agricultural markets are good examples of pure competition.Another market that could be part of pure competition is produce.If a consumer goes into a grocery store, the supply of red delicious apples may come from multiple farms.