Activity #1

A. Answer the following

What is the difference between monopolistic competition and perfect competition? Support
your answer.

- Only one business controls the pricing and supply levels of products and services in a
monopolistic market. A totally competitive market is one in which no single entity
enjoys market dominance.

B. Enumerate businesses/company that fall into different market structure. Explain your
answer
Pure/Perfect Monopolistic Oligopoly Monopoly
Competition Competition

Agriculture- In this
market, products are
very similar. Carrots,
potatoes, and grain are
all generic, with many
farmers producing them.
As the product is
homogenous, it is easy
to buy some land and
farm it. Additionally, it is
also easy to leave the
market too. So the
market has key signs of
perfect competition.
Soap- There are many
soap brands, each with a
slightly different style
and scent. It’s difficult to
really tell the difference
which is why some offer
to ‘kill 99.9% of bacteria’
and other slogans.
Airlines- Airline Fast food Company
industry today is -They sell an almost
arguably an oligopoly. similar type of products
As of 2021, there are but are not the
four major domestic substitute of each
airlines: American other.
Airlines, Inc. (AAL),
Delta Air Lines, Inc.
(DAL), Southwest
Airlines (LUV), and
United Airlines
Holdings, Inc. (UAL),
which fly just under
65% of all domestic
passengers in 2020.

Online Shopping- The Clothing- There are
internet allows
customers to compare
and gather ‘perfect
information’ on a
product. Consider a
specific book: there are
many buyers and many
distributors. In this case,
it may include Shopee,
Lazada At the same
time, there are generally
little differences in price.
many clothing
manufacturers that
distinguish themselves
based on style, yet also
have a certain level of
market power. At the
same time, it is relatively
straight forward to
manufacture clothes,
with low barriers to
entry.
Telecom- Once an Bakery Shop- There
actual monopolistic are certainly a lot of
corporation, AT&T was bakeries in any town
famously split up due and each one of them
to antitrust ruling into sells a slightly
several "Baby Bells". differentiated product
These spinoffs now to the consumer in the
maintain an oligopoly market. But if in a
in the landline and particular area of the
mobile phone provider town there exists only
space, including one bakery, then it can
Verizon (VZ), T-Mobile demand a slightly
(TMUS), and AT&T (T). higher amount of price
for its products. The
firms under
monopolistic
 competition with their
ability can gain a
greater degree of
market share due to
which it can increase
the prices of its
products.

Discount Brand- Restaurants- There Mass Media- Hairdresser- The

There may be cheaper are many separate National mass media service provided by the
versions of the same restaurants all and news outlets are a hairdressers in the
product in competing on the basis prime example of an market provides one of
supermarkets, such as on slight differences. oligopoly, with the bulk the most famous types
cereal made by the However, they are all of U.S. media outlets of the example of the
different brands. None competing for the same owned by just four monopolistic
of these substitutes will customer. corporations competition. There are
be significantly different certainly lots of
in quality or price, so hairdressers and each
they resemble a of the hairdressers has
perfectly competitive a slightly different type
market. of skill and thus each
one of them sells a
slightly differentiated
product to the
consumer in the
market. Also, they have
different premises
situated in a different
location where they
provide the services.
These things
differentiate the
product in the eyes of
the consumers. The
hairdresser service is
not the big chain
industry and thus keeps
them away from the
more oligopolistic
market structure.

Running shoes
Emergent Tech- Taxi’s- There are many Entertainment- market- There are a
Often, as in the case of clothing manufacturers Hollywood has long number of brands if
early online retailers, that distinguish been an oligopoly, with one is searching for
there are no clear themselves based on a select few movie running shoes like
market advantages, and style, yet also have a studios, film Adidas, ASICS Nike, etc.
many tech companies certain level of market distribution companies, The market of the
offer basically the same power and movie theater running shoes seems to
services for similar chains to choose from. be in full competition
prices. An example is The music
 on the one hand as
early social media entertainment there are many brands
companies—several new industry, too, is present competing with
firms offered dominated by only a each other as there are
comparable services for handful of players, low barriers to entry
virtually the same price. such as Universal and exit.
Music Group, Sony,
and Warner.