Question

The gizmo industry has the following characteristics: over 600 producers with no one producer furnishing more than .5% of the industry’s total output; gizmos produced by different firms carry unique brand names and labels; there are no significant barriers to entry to the gizmo market; there is no economic profit in the long run. The gizmo market is best described as what type of market? perfect competition monopolistic competition differentiated oligopoly undifferentiated oligopoly pure monopoly

Answer 1

Answer:

monopolistic competition

Explanation:

A monopolistic competition has the features of both a monopoly and a competitive firm.

Characteristics of a monopolistic competition includes:

1. Many buyers and sellers

2. Firms are price setters

3. Firms sell differentiated products

4. There are low barriers to entry and exit of firms.

5. Firms make zero economic profit in the long run.

Perfect competition has the above characteristics of a monopolistic firm except:

1. They are price takers

2. There are no barriers to entry and exit of firms

3. Firms do not sell differentiated products.

An oligopoly industry is characterised by few large firms, significant barriers to entry or exit of firms.

Monopoly firms earn economic profit in the long run, there is only one seller in the market and there are high barriers to entry or exit of firms.

I hope my answer helps you.