7. Market structures For each of the following scenarlos, determine which market

Question

7. Market structures For each of the following scenarlos, determine which market model best describes the scenario. Then identify the number of firms, the type of product, and the ease with which new firms can enter the market under this market structure. Number of Scenario Firms Type of Product Entry Market Model In a major metropolitan area, one chain of coffee shops has galned a large market share because customers feel its coffee tastes better than its competitors' coffee. [ Dozens of companies produce plain white socks. Consumers regard plain white socks as identical and don't care about who sells them their socks. The technology for producing socks is widely known, and any reputable person who wants to start a sock-manufacturing business can obtain a loan from a bank to buy the necessary machinery [ 7] ln a small city, 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. ] The government has granted Canada Post the exclusive right to deliver mail.

Explanation / Answer

Scenario 1 is monopolistic competition where product is differentiated and large no of firms and free entry and exit

Scenario 2 is perfect competitiom, homogenous product and large no of sellers and free entry and exit

Scenario 3 is oligopoly, homogenous product,few dominant sellers amd difficult entry

Scenario 4 is monopoly, single seller, homogenous product and dififficult entry and exit

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