In a perfectly competitive market, no single firm dominates the market because of the following reason:
Each firm produces so little of the total supply that they cannot influence prices.
In perfect competition, there are many firms producing identical (or very similar) products, and each firm is a price taker, meaning they must accept the market price determined by the overall supply and demand. Since no single firm has a substantial share of the total market supply, individual firms cannot influence the price; they can only sell at the market price. This characteristic is fundamental to the structure of perfect competition and explains why no firm can dominate the market.
The other options provided are not accurate in the context of perfect competition:
- "Each firm sells to different people" is misleading, as firms in perfect competition sell to the same overall market.
- "It will eventually become a monopoly" does not hold true because perfect competition is defined by a large number of firms, making it resistant to monopolistic tendencies.
- "No firm wants to" does not explain the lack of dominance in market structure.
Therefore, the best answer is that each firm produces so little of the total supply that they cannot influence prices.
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