1. characteristics of price - taker markets\nfirms in the market will be price - takers when the following…

1. characteristics of price - taker markets\nfirms in the market will be price - takers when the following conditions are met:\n1. all firms in the market produce an identical product.\n2. a large number of firms (buyers and sellers) exist in the market so that no single firm dominates the market.\n3. each firm supplies only a very small portion of total output supplied to the market.\n4. no barriers limit entry into or exit from the market, and firms and resources are fully mobile.\nuse the dropdown menus in the following table to identify whether each of the following scenarios describes a competitive price - taker market, along with the correct explanation of why or why not.\nscenario\nprice - taker market?\nin a major metropolitan area, one chain of smoothie shops has gained a large market share because customers feel its smoothies taste better than that of its competitors.\nin 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.\nthe government granted a patent to a pharmaceutical company for an experimental cancer drug. that company is the only firm permitted to sell the drug.\ndozens of companies produce plain white t - shirts. consumers regard these shirts as identical and do not have a preference of who manufactures them.

1. characteristics of price - taker markets\nfirms in the market will be price - takers when the following conditions are met:\n1. all firms in the market produce an identical product.\n2. a large number of firms (buyers and sellers) exist in the market so that no single firm dominates the market.\n3. each firm supplies only a very small portion of total output supplied to the market.\n4. no barriers limit entry into or exit from the market, and firms and resources are fully mobile.\nuse the dropdown menus in the following table to identify whether each of the following scenarios describes a competitive price - taker market, along with the correct explanation of why or why not.\nscenario\nprice - taker market?\nin a major metropolitan area, one chain of smoothie shops has gained a large market share because customers feel its smoothies taste better than that of its competitors.\nin 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.\nthe government granted a patent to a pharmaceutical company for an experimental cancer drug. that company is the only firm permitted to sell the drug.\ndozens of companies produce plain white t - shirts. consumers regard these shirts as identical and do not have a preference of who manufactures them.

Answer

Brief Explanations:

  1. In a price - taker market (perfectly competitive market), firms produce identical products. This is a key characteristic as consumers view the products as homogeneous.
  2. A large number of firms (buyers and sellers) exist. In a competitive market, no single firm has the power to influence the market price, which is consistent with a large number of participants.
  3. Each firm supplies only a very small portion of total output. In perfect competition, firms are small relative to the market, so their output decisions do not significantly affect the overall market supply.
  4. No barriers limit entry into or exit from the market. Free entry and exit are important for long - run equilibrium in a competitive market. Firms can enter if there are profits and exit if there are losses.

Answer:

  1. All firms in the market produce an identical product.
  2. A large number of firms (buyers and sellers) exist in the market so that no single firm dominates the market.
  3. Each firm supplies only a very small portion of total output supplied to the market.
  4. No barriers limit entry into or exit from the market, and firms and resources are fully mobile.