Question

Consider the markets for head sets, smart phones, cellular telephone service, and cell phone applications. Assume the market for headsets is controlled by many firms selling similar products, smart phone manufacturers use advertising to differentiate their products, only a few firms control a large portion of the cellular telephone service market, and cell phone applications are produced by many firms selling differentiated products.

Classify the market for each of the following mobile goods and services as either monopoly, oligopoly, monopolistic competition, or perfect competition.
Monopoly Oligopoly Monopolistic Competition Perfect Competition
Head sets
Smart phones
Cellular telephone service
Cell phone applications

Answer 1

Answer: Please see answer below

Step-by-step explanation:

Headsets- perfect competition ---- This is because the market structure has many firms selling selling similar products, so there will be competition with the absence of price control by a particular firm.

Smart phones- monopolistic competition ---- This smart phone manufacturers use advertising to differentiate their products because even though the smart phones market here have many firms producing slightly same products , each firm has different products which cannot be perfectly substituted therefore operating in a monopolistic competitive medium

Cellular telephone service - oligopoly --- . In this Cellular telephone service market, there are a few firms that are selling either same or different services and so the few firms influence each other.

Cell phone applications - monopolistic competitions---- This is because many firms are selling different products and therefore decisions on price and the company depend on individual firm which leads monopolistic competition.