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Chapter 10: Problem 1

An industry with many small sellers, a differentiated product, and easy entry would best be described as which of the following? a. Oligopoly b. Monopolistic competition c. Perfect competition d. Monopoly

Short Answer

Expert verified
The correct market structure based on the given information (many small sellers, differentiated products, and easy entry) is: b. Monopolistic competition

Step by step solution

01

Review the characteristics of each market structure

To solve this question, the student must familiarize themselves with the characteristics of the four market structures: oligopoly, monopolistic competition, perfect competition, and monopoly. Here are the main features of each market structure: 1. Oligopoly: - Few large sellers - Barriers to entry - Differentiated or homogenous products 2. Monopolistic competition: - Many small sellers - Easy entry and exit - Differentiated products 3. Perfect competition: - Many small sellers - Easy entry and exit - Homogenous products 4. Monopoly: - Single seller - Barriers to entry - Unique product
02

Match the given information with market structure characteristics

The exercise provides the following information about the industry: - Many small sellers - Differentiated products - Easy entry We can now compare these features with the characteristics of each market structure mentioned in step 1.
03

Identify the correct market structure

After comparing the given information with the market structure characteristics, it becomes clear that this industry's features match with monopolistic competition. Therefore, the correct answer is: b. Monopolistic competition

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Most popular questions from this chapter

The cigarette industry in the United States is described as a. a monopoly. b. perfect competition. c. monopolistic competition. d. an oligopoly.

A characteristic of an oligopoly is a. mutual interdependence in pricing decisions. b. easy market entry. c. both (a) and (b). d. neither (a) nor (b).

The "Big Three" U.S. automobile industry is described as a. a monopoly. b. perfect competition. c. monopolistic competition. d. an oligopoly.

One possible effect of advertising on a firm's long-run average cost curve is to a. raise the curve. b. lower the curve. c. shift the curve rightward. d. shift the curve leftward.

Which of the following industries is the best example of monopolistic competition? a. Wheat b. Restaurant c. Automobile d. Water service
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