10. Characteristics of competitive marketsThe model of competitive markets relies on these three core assumptions:1. There must be many buyers and sellers-a few players can't dominate the market.2. Firms must produce an identical product-buyers must regard all sellers' products as equivalent.3. Firms and resources must be fully mobile, allowing free entry into and exit from the industry.The first two conditions imply that all consumers and firms are price takers. While the third is not necessary for price-taking behavior, assume for thisproblem that a market cannot maintain competition in the long run without free entry.Identify whether or not each of the following scenarios describes a competitive market, along with the correct explanation of why or why not.ScenarioCompetitive?Dozens of companies produce plain white socks. Consumers regard plain white socks asidentical and don't care who manufactures their socks.Yes, meets all assumptionsNo, no free entryIn a small town, there are two providers of broadband Internet access: a cable companyand the phone company. The Internet access offered by both providers is of the sameNo, not many sellersspeed.No, not an identical productSeveral stores in the mall sell hooded sweatshirts. Each store's sweatshirts reflect thestyle of that particular store. Additionally, some makers use higher-quality cotton thanothers, which is reflected in the apparel's prices.Scholastik Inc. owns the U.S. copyright to a popular book series. It is the only companywith the legal right to publish books in the series in the United States.

The market structure in which there are a high number of vendors and buyers of a product is referred…

Scenario Competitive? Dozens of companies produce plain white socks. Consumers regard plain white socks as identical and don't care who manufactures their socks. Yes, meets all assumptions No, no free entry In a small town, there are two providers of broadband Internet access: a cable company and the phone company. The Internet access offered by both providers is of the same No, not many sellers speed. No, not an identical product

Scenario Competitive? Dozens of companies produce plain white socks. Consumers regard plain white socks as identical and don't care who manufactures their socks. Yes, meets all assumptions No, no free entry In a small town, there are two providers of broadband Internet access: a cable company and the phone company. The Internet access offered by both providers is of the same No, not many sellers speed. No, not an identical product

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter13: Firms In Competitive Markets

Section: Chapter Questions

Problem 1QR

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