Identify whether or not each of the following scenarios describes a competitive market, along with the correct explanation of why or why not. Scenario The government grants a patent to a pharmaceutical company protecting an experimental cancer treatment. That company is the only pharmaceutical producer allowed to manufacture and sell the treatment. In a large city, one chain of coffee shops controls a large market share because locals believe its coffee tastes better than that of its competitors. In a college town, students choose between two providers of wireless internet access. All student housing is wired for both companies, and the internet service offered by both providers is equally fast and reliable. Dozens of clothing manufacturers produce plain black undershirts. Consumers view plain black undershirts as identical and have no preference which company makes their undershirts. Is the market competitive? Yes, satisfies all assumptions No (no free entry) No (not many sellers) No (not an identical product)

Identify whether or not each of the following scenarios describes a competitive market, along with the correct explanation of why or why not. Scenario The government grants a patent to a pharmaceutical company protecting an experimental cancer treatment. That company is the only pharmaceutical producer allowed to manufacture and sell the treatment. In a large city, one chain of coffee shops controls a large market share because locals believe its coffee tastes better than that of its competitors. In a college town, students choose between two providers of wireless internet access. All student housing is wired for both companies, and the internet service offered by both providers is equally fast and reliable. Dozens of clothing manufacturers produce plain black undershirts. Consumers view plain black undershirts as identical and have no preference which company makes their undershirts. Is the market competitive? Yes, satisfies all assumptions No (no free entry) No (not many sellers) No (not an identical product)

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter24: Perfect Competition

Section: Chapter Questions

Problem 7E

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