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bulgar [2K]
3 years ago
9

Classify the following markets as perfectly competitive, monopolistic, or monopolistically competitive, and explain your answers

.
Wooden no. 2 pencils
Copper (hint: there are many sellers)
Local public utilities (ex. water, electricity)
Peanut butter
Lipstick
Business
1 answer:
IrinaK [193]3 years ago
3 0

Answer:

Wooden no. 2 pencils

  • Perfectly competitive market because there are many buyers and suppliers of pencils. Also, wooden no. 2 pencils are basically identical no matter which brand you purchase.

Copper (hint: there are many sellers)

  • Copper is considered a commodity which has many suppliers and consumers around the world, therefore, it is classified as a perfectly competitive market. No individual supplier, nor any individual consumer has enough market power to affect the price and supply of copper.

Local public utilities (ex. water, electricity)

  • Monopolistic market because there are generally only one supplier of each type of public utilities, e.g. one water company per city.

Peanut butter  

  • Monopolistically competitive markets since there are many consumers and suppliers, but each supplier produces a slightly different product. Even though there are several peanut butter brands, no two brands offer the same peanut butter.

Lipstick

  • Monopolistically competitive markets since there are many consumers and suppliers, but each supplier produces a slightly different product. Even though there are several lipstick brands, no two brands offer the same lipstick.
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