Question

In Vin del Mar, Chile, there are a dozen stores specializing in selling the same quality of seafoodproducts on one street. An individual store dare not charge more than the going price without therisk of losing business to the other stores that are selling the fish at a common price. This is anexample of what type of market?
A) pure competition
B) monopolistic competition
C) oligopolistic competition
D) pure monopoly
E) socialist

Answer 1

Answer:

A) pure competition

Explanation:

A pure competition is characterised by :

1. Many buyers and sellers of homogenous goods

2. Firms are price takers. They do not set the price for their products.

3. There are no barriers to entry or exit of firms

The sellers of seafood products exhibit the first two characteristics, hence, they are a pure competition

A monpolistic firm is characterised by

1. Many buyers and sellers of differentiated goods.

2. Firms set the price for their goods

An oligopoly is characterised by:

1. Few large firms in the industry

I hope my answer helps you