American Express, a credit card firm, provides services to consumers that include plastic cards, individual accounts, and phone-based customer service. It also provides merchants with services, such as terminals for authorizing transactions and procedures for submitting charges. Based on the above facts, American Express is said to be in a _____ market.
A) monopolistic
B) niche
C) captive
D) two-sided
E) contestable

Question

Quizplus · Accepted Answer

American Express is in a two-sided market because it provides services to both consumers and merchants. This type of market involves platforms or businesses that connect two (or more) distinct user groups, where the value of each group increases as the size of the other group increases. In this case, the more consumers that use American Express cards, the more attractive it becomes for merchants to accept American Express as a payment method, and vice versa.

American Express, a Credit Card Firm, Provides Services to Consumers