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How to Categorize Companies into Market Structures

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1. (20 points) In the following list is a number of well-known companies and the product that they sell. Which of the four types of markets (perfect competition, monopoly, monopolistic competition, oligopoly) best characterizes the markets in which they compete? Explain why. Hint: You may wish to distinguish between national and local/regional markets for some firms.
a. McDonald's - hamburgers
b. Exxon-Mobil - gasoline
c. Dell - personal computers
d. Heinz - ketchup
e. Proctor & Gamble - disposable diapers
f. Starbucks - gourmet coffee
g. Domino's - pizza
h. Intel - computer chips for PC's

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Solution Preview

The basic characteristics of pure (perfect) competition, monopoly, monopolistic competition, and oligopoly market structures are as follows:

In pure competition, there are a large number of firms competing for sales on the same or very similar products. The products are standard and not differentiated. In this market companies are price takers in that they do not have a lot of leeway in changing the prices of the products but have to adjust their efforts to ...

Solution Summary

This solution helps students classify/categorize companies into their relevant market structures.