Chapter: 5 Question: Categorize each seller below on the basis of the type of market it operates in. Explain each of your answers: a. A Cattle farmer b. A Computer market c. A picture framing shop is a large metropolitan area. d. A seller of Canadian dollars in a foreign currency markets. e. A life insurance company f. A liquor store in a remote village g. A visual Artist h. A Country that produces a valuable radioactive mineral found in no other part of the world. Answer to the question no. 1 a. A Cattle farmerThis is a Perfect Competition Market.
There are many sellers and buyers, product is standardized and there are almost no entry or exit barriers. b. A Computer marketMonopolistic Competition Market: Computer knowledge is required to be in this market, there are fairly number of buyers and sellers. This is a service oriented market. There are almost no entry or exit barriers. c. A picture framing shop is a large metropolitan area. Monopolistic Competition: Only people with picture framing skill and have good taste of picture are sellers and buyers in this market.
It is a service oriented industry and there are ways to differentiate by providing superior quality of service. There are almost no entry or exit barriers. d. A seller of Canadian dollars in a foreign currency markets. It is a Perfect Competition market with standardize product and there are many buyers and sellers. There are almost no entry or exit barriers. e. A life insurance companyIt is an Oligopoly. Entry and exit is regulated, product is almost standardized. There are entry or exit barriers. f.
A liquor store in a remote villageIt is a Monopoly: Being in this business required special license from government authority. In a remote village government would like to regulate the item by permitting a single seller in the business (depends on cultural background of a country). As such entry and exit will be difficult. Product is standardized. g. A visual ArtistIt is a Monopolistic/ Oligpoly Competition: Sellers can differentiate their product by creativity and there are only few sellers and buyers in this market. h. i.