Question

Q3. If perfectly competitive firms are price takers, and monopolistic, monopolistic competitive, and oligopolistic firms are price searchers, then it follows that three times as many firms in the real world are price searchers than are price takers. Do you agree or disagree? Explain your answer.

Q4. Critically analyze the following statement with views of your own: “There is no substitute for an airline pilot: Someone has to fly the plane. Therefore, an increase in the wage of airline pilots will not change the number of pilots used by the airlines.” Note: For all your answers support your views/opinions with at least two to three scholarly references, and a word count of 400-500 words for each answer.

Answer 1

Q3)

The perfectly competitive market is very rare in the real world. The agricultural sector exhibits the features of the perfectly competitive market and but it does not fully resembles the perfectly competitive market. The perfectly competitive firms do not have control over the price. And these firms are price takers.

On other side, the monopolistic competition and oligopoly cases are very common in the market. the monopoly market is also very rare or it is governed by the government itself. These firms are price makers.

Thus, we can conclude that price searchers even could be larger than three times of price taker.