Answer to Question #117395 in Macroeconomics for ahmad abdallah

Question

Which of the following is the best example of a monopolistically competitive market? *
A) The wheat market.
B) The electricity market.
C) The restaurant market.
D) The market for automobiles

Answer 1

The correct answer is C) The restaurant market.

A monopolistic competitive market is a market structure where numerous firms sell similar goods and services. It exhibits characteristics such as minimal entry and exit barriers, many firms, differentiated products, and they are price-makers. Thus, the restaurant market shows a monopolistic competitive market features.

The wheat market categorizes under perfect competition since it is a homogenous product and has numerous buyers and sellers.

The electricity market primarily categorizes as a monopolistic market structure due to the features it exhibits, such as high entry barriers and exit and dominance in the market.

The market for automobiles categorizes under oligopoly since it features a few numbers of firms in the market and homogenous or differentiated products.