All the questions has the same drop-down answer as below: Characteristics of com
ID: 1095124 • Letter: A
Question
All the questions has the same drop-down answer as below:
Characteristics of competitive markets The model of competitive markets relies on the following three core assumptions: There must be many buyers and sellers-a few players can't dominate the market. Firms must produce a standardized product-buyers must regard all sellers' products as equivalent. Firms and resources must be fully mobile, allowing for free entry into and exit from the industry. In other words, there are many potential sellers. Taken together, these three conditions imply that in a competitive market, all firms are price takers, i.e., they do not have influence over the price of their product. Identify whether each of the following scenarios describes a competitive market, along with why or why not. In a major metropolitan area, one chain of coffee shops has gained a large market share, because customers feel its coffee tastes better than that of its competitors. Dozens of companies produce plain white socks. Consumers regard plain white socks as identical and don't care about who sells them their socks. Two taxi companies serve most of the market in a big city. Consumers don't care which taxi company they take-if they decide it's worth taking a taxi, they flag down the nearest one.Explanation / Answer
1st statement : not a standardized product. in this case customers regards that one coffee tastes better then its competitor therefore it violates second assumption.
2nd statement: it meets all the assumptions.there fore its competitive market
3rd statemnet: only few sellers,in this case number of producers is limited therefore it violates the first assumption hence it is not a competeitive market.
4th statement: no free entry.sinsce here the government involved in this matter there is no one who can enter this market.therefore there is no free entry,hence it is not competitve market