Question

The government has granted a patent to a pharmaceutical company for an experimental AIDS drug. That company is the only firm permitted to sell the drug.

Answer 1

The essence of the question is about competitive markets. This is wrong because the example above is not a competitive market because the entry of goods is not free. And also not all companies can enter this market freely, therefore this market cannot be said to be a competitive market. Because there are only one distributor and no other competitors.

Further Explanation

The competitive market refers to a market characterized by a high level of competition. There are a large number of potential buyers and sellers, all of whom are individually powerless to influence market prices.

Characteristics of Competitive Markets

• There are many independent sellers and buyers.
• Large market liquidity.
• The balance of demand and supply determines the market price, the price for the seller and the price for the buyer.
• Goods must be identical, so it does not allow producers to charge a higher price than the market price.
• There are no external interventions that can affect the performance of market mechanisms.

Types of markets the imperfect competition:

• Monopoly: A single seller dominates the entire market.
• Oligopoly: There are several sellers who have more than two and fewer than ten and act in the competition.
• Monopsony: Many sellers and one buyer.
• Oligopsoni: Many sellers and some buyers.
• Monopolistic: Many sellers with different products and have their own characteristics.

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Competitive Market brainly.com/question/933427

Imperfect Competitive Market brainly.com/question/933427

Details

Grade: High School

Subject: Business

Keywords: market, competitive, imperfect

Answer 2

The question refers to whether that scenario describes a competitive market, and the answer is - no. This scenario that you have presented us with is not an example of a competitive market because there is no free entry. Because firms cannot freely enter this market, this cannot be said to be competitive, because there are no companies to compete if there is only one firm involved.