HELP!!!!! In each of the following situations, do you think the industry describ
ID: 1213184 • Letter: H
Question
HELP!!!!!
In each of the following situations, do you think the industry described will be perfectly competitive or
not? Explain your answer.
a. There are two producers of aluminum in the world, a good sold in many places.
b. The price of natural gas is determined by global supply and demand. A small share of that global
supply is produced by a handful of companies located in the North Sea.
c. Dozens of designers sell high-fashion clothes. Each designer has a distinctive style and a loyal clientele.
d. There are many baseball teams in the United States, one or two in each major city and each selling
tickets to its hometown events.
Explanation / Answer
The perfectly competitive market shows certain characterisitcs such as large numbers of producers and customers. The production of products is similar by lareg number of companies. It does not show any barrier to the entry into the market or even exit also.
(a) There are two producers of aluminum in the world, a good sold in many places. It does not shows a perfectly competitive market. It shows a monopolistic market where the two producers of aluminum rules the market on an international platform. The two producers of Aluminium sells their product in the market which shows the monopoly characteristics of the company.
(b)
The price of natural gas is determined by global supply and demand. A small share of that global supply is produced by a handful of companies located in the North Sea. It shows monopoly because the oil market is governed by few companies who decides the price of the oil globally. It is not an example of perfectly competitive market.
(c) Dozens of designers sell high-fashion clothes. Each designer has a distinctive style and a loyal clientele. It shows the characteristics of monopolistic competition which shows that different producers have different products which are different from one another. It does not show a perfect subtitute of the product.
(d)
There are many baseball teams in the United States, one or two in each major city and each selling tickets to its hometown events. It shows an example of perfectly competitive. The sport, "baseball" hs many teams in the US being played in major cities. The tickets are sold in every citites for every match held in teh hometown which shows perfectly competitive market of baseball events taking place.
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