In a large metropolitan market, it is relatively easy to set up a law office. The ease of entry explains why you will find hundreds of lawyers listed in the Toronto phone book. Each lawyer is a close substitute for another but with slight differences. Which of the following market structures best describes the one in which lawyers operate?
A) monopolistic competition
B) pure competition
C) oligopoly
D) perfect monopoly

Question

Quizplus · Accepted Answer

The market structure in which lawyers operate is best described as monopolistic competition. This is because there are many firms (or lawyers) operating in the market, but each one offers slightly different services, making them close substitutes but not identical. This leads to a degree of product differentiation and non-price competition, such as advertising and reputation-building.

In a Large Metropolitan Market, It Is Relatively Easy to Set