Which of the following is (are) most likely to be produced under conditions resembling perfect competition—automobiles, beer, corn, diamonds, or eggs? Defend your answer in economic terms.

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According to microeconomic theory, a market structure can be said to fall under the condition of perfect competition if all of the following criteria are met:

1.) The various sellers of a product act independently. Furthermore, no individual firm should be able to produce more than an insignificant number of the total output of the entire industry. The larger the number of firms that exist to satisfy demands for one particular product, the easier this criterion is to meet.

2.) All firms in a particular industry sell a homogenized, or standardized, end product. This means that there should be no significant differences between the kinds of products produced by one firm versus another if they are involved in the same industry.

3.) The barriers of entry to the industry in question should be extremely low, so that no new firm has difficulty entering it and competing with other firms.

4.) All buyers and sellers should have perfect information and perfect mobility.

In general, agricultural products,...

(The entire section contains 3 answers and 879 words.)

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