Question

Under which of these market classifications does each of the following most accurately fit?

i. A supermarket in your hometown.
ii. The steel industry.
iii. A Kansas wheat farm.
iv. The commercial bank in which you or your family has an account.
v. The automobile industry.

Answer 1

Pure Competition: A very huge number of firms; uniform products; no rent controls: price takers; no entry barriers; no un-price competition.

Oligopoly: Few companies; uniform or distinguished goods; price controls constricted by mutual interdependence: a great deal of anti-price competition, especially product difference.

i. Supermarkets in hometown - Oligopoly - Supermarkets in every area are few in the total amount.

ii. Steel industry - Oligopoly - Companies are few; their goods are somewhat standardized.

iii. Kansas wheat farm - Pure Competition - there is no price control; there is no non-price competition.

iv. Commercial bank - Oligopoly - the facilities are as distinct as the bank can help them look.

v. Automobile industry - Oligopoly - Imports made the industry more competitive in the past 2 years, dramatically increasing American automakers' market power.

Answer 2

Answer: i. A supermarket in your hometown. - fits more precisely to the market structure of oligopoly.

ii. The steel industry. - fits more precisely to the market structure of oligopoly.

iii. A Kansas wheat farm. - fits more precisely to the market structure of perfect competition.

iv. The commercial bank in which you or your family has an account. - fits more precisely to the market structure of perfect competition.

v. The automobile industry. - fits more precisely to the market structure of oligopoly.