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Question: 1 characteristics of competitive markets the model of competitive markets...

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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 cant dominate the market. 2. Firms must produce an identical product-buyers must regard all sellers products as equivalent. 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 nat necessary for price-taking behavior, assume for this problem that a market cannot maintain competition in the long run without free entry. Identify whether or not each of the following scenarios describes a competitive market, alonng with the correct explanationn of why ar why not. Scenario 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 af the same speed Dozens of companies produce plain white socks Competitive? Consumers regard plain white socks as identical and dont care who manufactures their socks. In a major metropolitan area, one chain of coffee shops has gained a large market share because customers feel its caffee tastes better than that of its competitors. The gavernment has granted a patent to a pharmaceutical company for an experimental AIDS drug. That company is the only firm permitted to sell the drug.

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