This week, we discussed the structure of markets and their two extremes: monopoly and perfect competition. The following questions ask you to describe markets that are between these two extremes.
Describe a market for a good or service that exhibits monopolistic competition. Are firms in a monopolistically competitive market more innovative than a perfectly competitive market or a monopoly?
Describe a market for a good or service that is an oligopoly. How does the structure of this market affect the firms' decision-making?
An example of a market that describes monopolistic competition is the fast food restaurant market such as McDonald's, Wendy's, Burger King, etc...In this market, all those restaurant compete for basically the same type of product but, with varying characteristics. Therefore, in order to remain in the competition, each has its own way of presenting the product to the customer.
I would say that firms in a monopolistically competitive market are definitely more innovative than a perfectly competitive market or a monopoly. In perfectly competitive ...
This solution discusses market structures and their implications.