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Chapter 7Guided ReadingSection 1Cause:Buyers and sellers are not likely to worktogether to bargain for better prices.Effect: The market determines price withoutinfluence from suppliers or consumers.Cause:the buyer will not pay extra for oneparticular company’s goodsEffect: Identical products are key to perfectcompetition.Cause: Entrepreneurs are less likely to entera market with high start up cause.Effect:markets that involve high start-up costsare less likely to be perfectly competitivemarkets.Cause: Sometimes firms cannot makeenough to stay in business.Effect:Firm enters and leaves a perfectlycompetitive marketCause:Many sellers compete to offer theircommodities to buyers.Effect: Prices are forced down to the pointwhere they just cover the seller’s cost ofdoing business.Cause:no suppliers can influence prices in aperfectly competitive market.Effect: Producers adjust their output decisionsbased on their most efficient use of availableland, 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 thesame product.8. commodityA product that is the same no matter who produces it,, such aspetroleum notebook paper, or milk.