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eller. Rather, price and quantity are determined by all buyers and sellers as they interact in the marketplace. The market for ice cream, like most markets in the economy, is highly petitive. A petitive market is a market in which there are many buyers and many sellers so that each has a negligible impact on the market price. Each seller of ice cream has limited control over the price because other sellers are offering similar products. A seller has little reason to charge less than the going price, and if he or she charges more, buyers will make their purchases elsewhere. Similarly, no single buyer of ice cream can influence the price of ice cream because each buyer purchases only a small amount. In this chapter we examine how buyers and sellers interact in petitive markets. We see how the forces of supply and demand determine both the quantity of the good sold and its price. COMPETITION: PERFECT AND OTHERWISE We assume in this chapter that markets are perfectly petitive. Perfectly petitive markets are defined by two primary characteristics: (1) the goods being offered for sale are all the same, and (2) the buyers and sellers are so numerous that no single buyer or seller can influence the market price. Because buyers and sellers in perfectly petitive markets must accept the price the market determines,they are said to be price takers. There are some markets in which the assumption of perfect petition applies perfectly. In the wheat market, for example, there are thousands of farmers who sell wheat and millions of consumers who use wheat and wheat products. Because no single buyer or seller can influence the price of wheat, each takes the price as given. Not all goods and services, however, are sold in perfectly petitive markets. Some markets have only one seller, and this seller sets the price. Such a seller is called a monopoly. Your local cable television pany, for instance, may be a monopoly. Residents of your town probably have only one cable pany from which to buy this service. Some markets fall between the extremes of perfect petition and monopoly. One such market, called an oligopoly, has a few sellers that do not always pete aggressively. Airline routes are an example. If a route between two cities is serviced by only two or three carriers,the carriers may avoid rigorous petition to keep prices high. Another type of market is monopolistically petitive; it contains many sellers, each offering a slightly different product. Because the products are not exactly the same, each seller has some ability to set the price for its own product. An example is the software industry. Many word processing programs pete with one another for users, but every program is different from every other an