Which market structure best describes many buyers and many sellers with no single price maker?

• A. Monopolistic competition
• B. Oligopoly
• C. Perfect competition
• D. Monopsony

Answer: (C)

When there are many buyers and many sellers and no single price maker, prices are determined by the overall balance of supply and demand in the market, and individual participants take that price as given. This is perfect competition: many participants on both sides, homogeneous products, free entry and exit, and buyers and sellers with no power to influence price. Firms can’t set prices; they may sell at the going market price and earn only normal profits in the long run as new firms enter or leave. The other structures don’t fit because monopolistic competition, while having many firms, involves differentiated products and some pricing power; an oligopoly has only a few firms that can influence prices; a monopsony features many sellers but just one buyer, not many buyers.