Chapter 13, Problem 1DQ

To determine

The firms under oligopoly, monopolistic competition, and perfect competition.

Explanation of Solution

Oligopoly refers to a market structure in which a small number of interdependent firms compete. Some of the examples of oligopoly market are petroleum, chemicals, aircrafts and tires, cigarettes, beer, wireless service, steel, and so on.

Monopolistic competition is a type of imperfect market situation that has a relatively large number of buyers and sellers in the market, differentiated products, some control over the market price, and a few barriers to entry and exit. Groceries, shoe makers, restaurants, bicycle shops, laundries, novelty stores, and so on are examples of monopolistic competition.

Perfect competition is a market condition where a very large number of buyers and sellers exist, and the seller sells homogenous products with perfect knowledge. Farming and corporate stocks and bond sales are the examples of perfect competition. Generally, the perfect competition market is very rare to find because almost all the market structures in a practical situation have at least one different characteristic.

Economics Concept Introduction

Oligopoly: Oligopoly refers to a market structure in which a small number of interdependent firms compete.

Monopolistic competition: Monopolistic competition is a type of imperfect market situation that has a relatively large number of buyers and sellers in the market, differentiated products, some control over the market price, and a few barriers to entry and exit.

Perfect competition: Perfect competition is a market condition where a very large number of buyers and sellers exist, and the seller sells homogenous products with perfect knowledge.