Question

In the following list are a number of well-known companies and the products that they sell. Which of the four types of markets (perfect competition, monopoly, monopolistic competition, and oligopoly) best characterizes the markets in which they compete? Explain why.

1. McDonald’s hamburgers
2. ExxonMobil-gasoline
3. Dell-personal computers
4. Heinz-Ketchup
5. Procter & Gamble – disposable diapers
6. Starbucks –gourmet coffee
7. Domino’s - pizza
8. Intel – computer chip for the PC

Answer 1

a) McDonald's hamburgers

This is an example of Monopolistic competition. Because, there are several other food joints and food chains that sell Hamburgers. Also, each food joint or food chain has its own toppings or flavours thus, there is product differentiation which is yet again a feature of monopolistic competition.

b) ExxonMobil Gasoline

This is an example of oligopolistic market structure. Gasoline industries in several countries have a oligopolistic market structure where major players form a cartel and have mutual interdependence. ExxonMobil with few other giants in the gasoline industry control the supply and price of gasoline, and they alsoo have a mutual interdepenence.

c) Dell-personal computers

This is an example of Monopolistic competiton. Dell computers have several other close substitutes such as HP, Acer, Apple etc. These products come with differentiation where in companies demonstrate their differences in product or diffrences in features via advertisements

d) Heinz-Ketchup

Heinz ketchup is an example of monopolistic competition. Although, it is quite popular it still has several close substitutes and has to compete with them for market. However, Heinz-Ketchup can still maintain its price naturally high as it has emerged as a popular brand over the years.

e) Procter & Gamble – disposable diapers

It falls i=under the category of monopolistic competition. Because there are several other companies such as Kimberely clarck that also provide similar products.

f) Starbucks –gourmet coffee

It has a market structure of monopolistic competition, as there are several coffee chains in the market

g)Domino's Pizza

This is an example of Monopolistic competition, as there are several close substitutes for dominos. Each food joint brings its own toppings and flavours thus bringing in the feature of product differentiation

h) Intel- Computer chip for the PC

This is an example of Monoply. Intel has nearly a monopoly in the computer chip and is the single supplier. It has over the years maintained a share of nearly 99%, thus emerged as a monopoly