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Chapter 7Guided ReadingSection 1Cause: Buyers and sellers are not likely to work together to bargain for better prices.Effect: The market determines price without influence from suppliers or consumers.Cause:the buyer will not pay extra for one particular company’s goodsEffect: Identical products are key to perfect competition.Cause: Entrepreneurs are less likely to enter a market with high start up cause.Effect:markets that involve high start-up costs are less likely to be perfectly competitive markets.Cause: Sometimes firms cannot make enough to stay in business.Effect:Firm enters and leaves a perfectly competitive marketCause: Many sellers compete to offer their commodities to buyers.Effect: Prices are forced down to the point where they just cover the seller’s cost of doing business.Cause: no suppliers can influence prices in a perfectly competitive market.Effect: Producers adjust their output decisionsbased on their most efficient use of available land, labor, and capital.B. Reviewing Key TermsBriefly define or identify each of the following.7. perfect competitionA market structure in which a large number of firms all produce the same product.8. commodityA product that is the same no matter who produces it,, such as petroleum notebook paper, or milk.