Question

Which type of market environment (perfect competition, monopolistic competition, oligopoly, or monopoly) is each description below characterizing?

            The industry is characterized by interdependent behavior

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            The several firms in the industry each produce a slightly differentiated product

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The industry is made up of a single seller

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            The industry has a very large number of very small firms, each producing an identical product

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            The industry is made up of a very large number of very small firms, has product differentiation, and also has no barriers to entry

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Answer 1

a) interdependent behavior is represented by the firms in the oligopoly market.

b) In a monopolistic competition there are many firms producing the goods that are slightly differentiated.

c) A monopoly is made up of a single seller in the market.

d) In a perfect market condition there are a large number of firms in the market that are producing similar goods in the market.

e) This is a monopolistic competitive firm, where the number of firms are high and slightly differentiated goods.