Question

mense three assumptions imply that all consumers and firms are price takers. The final assumption is not necessary for price-taking behavior, but guarantees that a market remains competitive in the long run. Identify whether or not each of the following scenarios describes a perfectly competitive market, along with the correct explanation of why or why not Perfectly competitive? No not many sellers Scenario Several stores in the mall sell hooded sweatshirts. Each store's sweatshirts reflect the style of that particular store. Additionally, some stores use higher quality cotton than others, which is reflected in the apparel's prices. Dozens of companies produce plain white socks . Consumers regard plain white socks as standardized and don't care who manufactures their socks. 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 speed, Scholastik Inc. owns the U.S. copyright to a popular book series. It is the only company with the legal right to publish books in the series in the United States. Yes, meats all assumptions

Answer 1

Scenario 1. No, not a standardized product

reason- Perfect competition has standardized or homogenous product.

Scenario 2. Yes, meets all assumptions.

reason- There are too many firms and standard product. so it meets all assumptions

Scenario C. No, not many sellers

reason- there are only two sellers in the market. this doesn't meet the assumptions.

Scenario D. No, no free entry

reason- US copyright restricts free entry exit from the market.. so assumption are not met.