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    Identify the type of market each statement describes

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    For each of the following statements, identify the type of market it describes. Use an example from the readings or the internet for each characteristic and explain your choice.

    A. The company practices product differentiation
    B. The firm earns an economic profit in the long run
    C. Maximizes profits by equating MC and MR
    D. Has demand curve that is downward sloping
    E. Is in a market where new firms can enter the industry selling similar products

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    Solution Preview

    A. The company practices product differentiation.

    Price differentiation is definitely not part of perfect competition, where products are homogeneous, nor monopoly where products are unique. that just leaves monopolistic competition and oligopoly. while there is slight differentiation in monopolistic competition with oligopoly we may or may not have product differentiation. you could imagine food courts as monopolistic competitors, it's all fast food but slightly different. I suppose for oligopoly you might imagine Coke ...

    Solution Summary

    The expert identifies the type of market each statement describes.