Please select the competitive markets in below scenarios.
A. In a small town, there are two providers of broadband Internet access: a cable company and the phone company. The Internet access offered by both providers is of the same speed.
B. Dozens of companies produce plain white socks. Consumers regard plain white socks as identical and don't care about who sells them their socks. The technology for producing socks is widely known, and any reputable person who wanted to start a sock manufacturing business could obtain a loan from a bank to buy the necessary machinery.
C. Scholastik Inc. owns the U.S. copyright to a popular book series. It is the only company with the legal right to publish books in the series in the United States.
D. Several stores in the mall sell hooded sweatshirts. Each store's sweatshirts reflect the style of that particular store. Additionally, some stores use higher-quality cotton than others, which is reflected in the apparel's prices.

Respuesta :

Answer:

Option (B) is correct

Explanation:

A perfectly competitive market is characterized by the following:

  1. Large number of buyers and sellers: The number of buyers and sellers is so large that the output by an individual seller is in an insignificant portion to the total output.
  2. Homogeneous Products: Firms produce exactly identical products in terms of shape, size, color and other product attributes.
  3. Freedom of entry and exit: There is no restriction in new firms joining in and old firms leaving the industry.
  4. Firms are price takers: The price in such a market is determined by the interaction of market forces of demand and supply by the industry and individual firms take this price as given.

In the given case, broadband providers control prices since there are only two broadband providers, hence not a competitive market form.

Similarly, Scholastik Inc represents a monopoly i.e single seller and mall stores do not sell exactly similar or homogeneous products.

Thus, only the scenario of dozen companies producing exactly same socks, perfect knowledge on part of both buyers and sellers and with freedom of entry of new firms, corresponds to perfectly competitive market form.