If there are many firms participating in a market, the market is either:
A)an oligopoly or perfectly competitive
B)an oligopoly or monopolistically competitive
C)perfectly competitive or monopolistically competitive
D)all of the above are possible

Question

Quizplus · Accepted Answer

If there are many firms participating in a market, the market can be either perfectly competitive or monopolistically competitive. In a perfectly competitive market, there are many firms selling identical products, and no one firm has control over the market price. In a monopolistically competitive market, there are many firms selling differentiated products, and each firm has some degree of control over the price of its product due to brand differentiation. An oligopoly market consists of a small number of firms selling products that may or may not be differentiated, and these firms have significant control over the market price. Therefore, option A and B are incorrect. Option D is also incorrect because the market cannot be both perfectly competitive and an oligopoly at the same time.

If There Are Many Firms Participating in a Market, the Market