If an industry is perfectly competitive, what type of products are sold?

In a perfectly competitive market, the products sold are classified as commodities. This means that the products are uniform and interchangeable, with no discernible differences from one producer to another. This uniformity is essential in a perfectly competitive market because it allows consumers to view all offerings as equivalent, leading to price competition rather than product differentiation.

In perfect competition, individual firms are price takers — they have no control over the market price and must accept the prevailing market price for their product. Since the goods are identical and consumers can easily switch between suppliers, firms cannot charge a higher price than the market rate without losing customers. The focus is solely on price, as the product itself does not vary.

Products categorized as utilities or needs, while they may be relevant in various market scenarios, do not specifically describe the nature of goods in perfect competition. Similarly, differentiated products are characteristic of monopolistic and oligopolistic markets where companies compete on aspects other than price, such as branding or unique features. Therefore, the correct classification in a perfectly competitive market context is commodities, emphasizing the standardization and interchangeability of the products.