Question

Market structures

For each of the following scenarios, identify the number of firms present, the type of product, and the appropriate market model. Select the matching entry for each drop down box in the following table.

A large city has lots of small shops where people can buy sweaters. Each store's sweaters reflect the style of that particular store. Additionally, some stores use higher-quality cotton than others, which is reflected in their price.

Many

Differentiated

Monopoly

Number of Firms: Many/One/Few | Type of Product :Differentiated / Identical / Unique | Market Model: Monopoly / Oligopoly / Monopolistic competition / Perfect Competition

There are dozens of pasta producers that sell pasta to hundreds of Italian restaurants nationwide. The restaurant owners buy from the cheapest pasta producer they can. While pasta manufacturers must pay licensing fees to their local government and undergo regular food-safety inspections, anyone who passed inspections can acquire and maintain their license.

Number of Firms: Many/One/Few | Type of Product :Differentiated / Identical / Unique | Market Model: Monopoly / Oligopoly / Monopolistic competition / Perfect Competition

In a small town, there are four providers of broadband Internet access: a cable company, the phone company, and two satellite companies. The Internet access offered by all four providers is of the same speed. Almost everyone in the city already has broadband, so any potential new company would have to engage in a price war with the existing companies and would be unlikely to cover its costs for years, if ever.

Number of Firms: Many/One/Few | Type of Product :Differentiated / Identical / Unique | Market Model: Monopoly / Oligopoly / Monopolistic competition / Perfect Competition

A publishing company owns the U.S. copyright to a popular series of books. It is the only company with the legal right to publish these books in the United States.

Number of Firms: Many/One/Few | Type of Product :Differentiated / Identical / Unique | Market Model: Monopoly / Oligopoly / Monopolistic competition / Perfect Competition

Answer 1

a) A large city has lots of small shops where people can buy sweaters. Each store's sweaters reflect the style of that particular store. Additionally, some stores use higher-quality cotton than others, which is reflected in their price.

Many, Differentiated, monopolistic competition

b) There are dozens of pasta producers that sell pasta to hundreds of Italian restaurants nationwide. The restaurant owners buy from the cheapest pasta producer they can. While pasta manufacturers must pay licensing fees to their local government and undergo regular food-safety inspections, anyone who passed inspections can acquire and maintain their license.

Many, Identical, Perfect competition

c) In a small town, there are four providers of broadband Internet access: a cable company, the phone company, and two satellite companies. The Internet access offered by all four providers is of the same speed. Almost everyone in the city already has broadband, so any potential new company would have to engage in a price war with the existing companies and would be unlikely to cover its costs for years, if ever.

Few, Identical, Perfect competition

d) A publishing company owns the U.S. copyright to a popular series of books. It is the only company with the legal right to publish these books in the United States.

One, Unique, Monopoly