Firm A is concerned about the reactions of buyers to the price it sets for its p

Question

Firm A is concerned about the reactions of buyers to the price it sets for its product. Firm B is concerned about the reactions of buyers and its few rivals to the price it sets for its product. Firm C has no control over the price at which its product is sold. Which of the following best describes Firms A, B, and C respectively?

A) a monopolistic competitor, an oligopolist, and a pure competitor.

B) an oligopolist, a monopolistic competitor, and a pure competitor.

C) a monopolistic competitor, a pure competitor, and an oligopolist.

D) a pure competitor, an oligopolist, and a monopolistic competitor.

E) None of the above is correct.

Explanation / Answer

A) a monopolistic competitor, an oligopolist, and a pure competitor.

A monopolistic competitor is worried about the price its sets for its product since there are many rivals with similar products with differenciation.

An oligopolist faces a few firms for competition

A perfectly competitive firm has no control over the market prices.

Hence, the answer is A

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