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Suppose the food court at your local mall has around a dozen different restaurants. Thinking about the food offered at these restaurants, which characteristics of competitive markets does the food court exhibit?

1) Price taking
2) Every firm is a seller
3) Free entry and exit
4) Similar products

User Woodtluk
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Final answer:

The food court at a local mall exhibits characteristics of monopolistic competition, including price taking, free entry and exit, and the sale of similar but distinctive products, which creates a mini-monopoly for each restaurant while maintaining competition. Option 4) Similar products is the correct answer.

Step-by-step explanation:

When considering the characteristics of competitive markets exhibited by the food court at a local mall, we look at aspects such as monopolistic competition. In this setting, there are several elements at play: price taking, where each restaurant accepts the market price due to the competition; free entry and exit, allowing new restaurants to open and unsuccessful ones to close without significant barriers; and similar products, with each serving food while offering unique flavors, styles, or brand names that create a mini-monopoly on their offerings.

Despite a large number of competing firms, each restaurant's product is distinctive, like the variety found in the Mall of America, although they must also compete with other styles and flavors. Such a market is not a perfect competition because the products are not identical and firms have more control over their prices, unlike in perfect competition. Nevertheless, they are not as influential as a monopolistic firm would be. This environment creates a strong competition among the food court restaurants, encouraging innovation and variety.

User Sithumc
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