Market structures differ on two important dimensions:
A)price discrimination and product differentiation.
B)number of sellers and product differentiation.
C)surplus maximization and number of sellers
D)price discrimination and surplus maximization

Question

Quizplus · Accepted Answer

Market structures are primarily differentiated based on the number of sellers and the degree of product differentiation. In perfect competition, there are many sellers and homogeneous products, while in monopolistic competition there are still many sellers but differentiated products. In oligopoly, there are only a few sellers and differentiated products, and in monopoly, there is only one seller with no close substitutes. Price discrimination and surplus maximization are concepts that can be applied to any market structure, but they are not the defining characteristics that differentiate one market structure from another. The two important dimensions that differentiate market structures are the number of sellers and product differentiation. The number of sellers determines the level of competition in the market, while product differentiation refers to how similar or distinct products are from one another. These dimensions help to classify different types of markets, such as perfect competition, monopolistic competition, oligopoly, and monopoly. Price discrimination and surplus maximization are not dimensions on which market structures are differentiated.

Market Structures Differ on Two Important Dimensions