Chapter 57, Problem 1FRQ

a)

To determine

The market structure which exhibits the characteristic of many sellers

Explanation of Solution

Perfect competition and monopolistic competition are the market structures that exhibit the characteristic of many sellers.

Economics Concept Introduction

Introduction: All firms in the perfectly competitive industry sells the same or identical product and market share of the firm cannot affect price.

Many companies or firms are present in the monopolistically competitive industry who sells similar but differentiated products in the market.

b)

To determine

The market structure which exhibits the characteristic of price takers

Explanation of Solution

Perfect competition is the market structure which exhibits the characteristic of price takers.

Economics Concept Introduction

Introduction: All firms in the perfectly competitive industry sells the same or identical product and market share of the firm cannot affect price.

c)

To determine

The market structure which exhibits the characteristic of barriers to entry

Explanation of Solution

Monopoly and oligopoly are the market structures that exhibit the characteristic of barriers to entry.

Economics Concept Introduction

Introduction: In the monopoly, only one firm sells goods and services which are unique or having no substitutes in the market.

In oligopoly, there are few firms and they experience economies of scale, firms have price or market power and they need to collude.

d)

To determine

The market structure which exhibits the characteristic of differentiated product

Explanation of Solution

Oligopoly and monopolistic competition are the market structures that exhibit the characteristic of differentiated product.

Economics Concept Introduction

Introduction: Many companies or firms are present in the monopolistically competitive industry who sells similar but differentiated products in the market.

Differentiated products mean that products are not identical with each other and it makes the product stand out in the market. There is difference in marketing, packaging, or designing.