Question

In a perfectly competitive market, which of the following is a primary factor influencing pricing decisions?

Select one:

a. cost of production

b. availability of raw materials in the market

c. information on competitor's cost structure

d. value customers place on product

Answer 1

Answer.: D. Value customers place on product.

In a perfectly competitive market, value that customers place on product can influence the pricing decision.

cost of production, availability of raw materials or informaton on competitors' cost structure doesn't impact or influence pricing decision, because in perfectly competitve market the industries have many firms and may customers as well as all these firms are selling identical products. so, the sellers and buyers have all the relevent information to make their rational buing or selling decision for that products. that means the seller who provides good quality product in comparision to other sellers at the same price then customer will value that quality product and therafter seller can take some appropriate pricing decision for such quality product which is valued by customers.