Answer to Question #140425 in Microeconomics for Annie

Question

A large city has nearly 500 restaurants with new ones catering regularly as the population grows. The city decides to limit the number of restaurant licenses to 500. Which characteristics of this market are consistent with perfect competition and which are not Is this restaurant marker likely to be nearly perfectly competitive? Explain your answer

Answer 1

The main characteristics that determine a market structure are: the number of organizations in the market (selling and buying), their relative negotiation power in relation to the price setting, the degree of concentration among them; the level product of differentiation and uniqueness; and the entry and exit barriers .