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Question: 1. Characteristics of competitive markets

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1. Characteristics of competitive markets Enter question

The model of competitive markets relies on these three core
assumptions:

1. There must be many buyers and

sellers—a few players can't dominate the market.

2. Firms must produce an identical

product—buyers must regard all sellers' products as
equivalent. Continue to post
20 questions remaining
3. Firms and resources must be fully
mobile, allowing free entry into and exit from the industry.

The first two conditions imply that all consumers and firms are
price takers. While the third is not necessary
for price-taking
behavior, assume for this problem that a market cannot maintain
competition in the long
run without free entry. Snap a photo from your
Identify whether or not each of the following scenarios
describes a competitive market, along with the
phone to post a question
correct explanation
of why or why not. We'll send you a one-time dow
link
Scenario Competitive?

In a small town, there are two

providers of broadband Internet access: a cable company 888-888-8888 Text m
and the
phone company. The Internet access offered by both providers is of
the same
speed.
By providing your phone number, you agree to receive a
automated text message with a link to get the app. Stand
The government has granted a patent
to a pharmaceutical company for an messaging rates may apply.
experimental AIDS drug. That
company is the only firm permitted to sell the drug.

Dozens of companies produce plain

white socks. Consumers regard plain white socks as
identical and
don't care who manufactures their socks.
My Textbook Solutions
In a major metropolitan area, one
chain of coffee shops has gained a large market share
because
customers feel its coffee tastes better than that of its
competitors.

Add a Add
Expert Answer textbook textb

Introductor...

Anonymous answered this 14th Edition

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29,602 answers View all solutions

1) In a small town, there are two providers of broadband

Internet access: a cable company and the phone
company. The
Internet access offered by both providers is of the same speed

Competitive : No

Explanation: Only few sellers wherein ony two firms dominate the
broadband Internet market, they are not
price takers. In a
competitive market a few players can't dominate the market

2) The government has granted a patent to a pharmaceutical

company for an experimental AIDS drug.
That company is the only
firm permitted to sell the drug.

Competitive : No

Explanation: There is not a free entry into and exit from the
industry

3) Dozens of companies produce plain white socks. Consumers

regard plain white socks as identical and
don't care who
manufactures their socks

Competitive : Yes

Explanation: It meets all assumptions of perfect

competition.

4) In a major metropolitan area, one chain of coffee shops has

gained a large market share because
customers feel its coffee
tastes better than that of its competitors

Competitive : No

Explanation: The product is not a homogeneous.

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Q: Homework (Ch 14) 1. Characteristics of competitive markets The model of competitive markets relies on these three
core assumptions: 1. There must be many buyers and sellers-a few players can't dominate the market. 2. Firms must
produce an identical product-buyers must regard all sellers' products as equivalent. 3. Firms and resources must be
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