Chapter 14, Problem 1P

To determine

(a)

To find:

Whether soy market is a perfectly competitive market.

Answer to Problem 1P

The soy market is a perfectly competitive market.

Explanation of Solution

Soy market is a perfectly competitive market because there are large number of buyers and sellers, and the firms sells homogeneous product in the soy market.

Economics Concept Introduction

Monopolistically competitive market:

Monopolistic market refers to the market structure in which there are many firms which sell closely related but differentiated commodities.

Perfectly competitive market:

Perfectly competitive market refers to the market structure in which there are many buyers and sellers. The sellers sell homogeneous commodities in this market structure and there is free entry and exit of firms.

To determine

(b)

To find:

Whether retail clothing is a perfectly competitive market.

Answer to Problem 1P

The retail clothing is a monopolistically competitive market.

Explanation of Solution

Retail clothing is a monopolistically competitive market because there are many firms in this market which deal with closely related but differentiated commodities. For example, shirts can be different in color, size, and quality but all are closely related. So, retail clothing is a monopolistically competitive market.

Economics Concept Introduction

Monopolistically competitive market:

Monopolistic market refers to the market structure in which there are many firms which sell closely related but differentiated commodities.

Perfectly competitive market:

Perfectly competitive market refers to the market structure in which there are many buyers and sellers. The sellers sell homogeneous commodities in this market structure and there is free entry and exit of firms.

To determine

(c)

To find:

Whether S restaurant in B Hills is a competitive market.

Answer to Problem 1P

The S restaurant in B Hills is a monopolistically competitive market.

Explanation of Solution

The S restaurant in B Hills is a monopolistically competitive market because there can be many other restaurants in B Hills but not in large number. Since the restaurant deals with closely related but differentiated products. So, this market is termed as monopolistically competitive market.

Economics Concept Introduction

Monopolistically competitive market:

Monopolistic market refers to the market structure in which there are many firms which sell closely related but differentiated commodities.

Perfectly competitive market:

Perfectly competitive market refers to the market structure in which there are many buyers and sellers. The sellers sell homogeneous commodities in this market structure and there is free entry and exit of firms.