Identify whether or not each of the following scenarios describes a competitive market, along with the correct explanation of why or why not.
Two taxi companies serve most of the market in a big city. Consumers don't care which taxi company they take—if they decide it's worth taking a taxi, they flag down the nearest one.
The government has granted a patent to a pharmaceutical company for an experimental AIDS drug. That company is the only firm permitted to sell the drug.
There are hundreds of colleges that serve millions of students each year. The colleges vary by location, size, and educational quality, which allows students with diverse preferences to find schools that match their needs.
There are hundreds of high school students in need of algebra tutoring services in Denver. Dozens of companies offer tutoring services, and the parents who seek out tutors view the quality of the tutoring at the different companies to be largely the same.

Question

10-11-2016
Business

contestada

Identify whether or not each of the following scenarios describes a competitive market, along with the correct explanation of why or why not.
Two taxi companies serve most of the market in a big city. Consumers don't care which taxi company they take—if they decide it's worth taking a taxi, they flag down the nearest one.
The government has granted a patent to a pharmaceutical company for an experimental AIDS drug. That company is the only firm permitted to sell the drug.
There are hundreds of colleges that serve millions of students each year. The colleges vary by location, size, and educational quality, which allows students with diverse preferences to find schools that match their needs.
There are hundreds of high school students in need of algebra tutoring services in Denver. Dozens of companies offer tutoring services, and the parents who seek out tutors view the quality of the tutoring at the different companies to be largely the same.

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Erudite1 Erudite1 · Answer 1 · 2016-11-17T12:55:49+01:00

Two taxi companies scenario does not describe a competitive market, this is because the companies are just two, for a market to be competitive it must have numerous companies offering identical products. The pharmaceutical company scenario is not an example of a competitive company because it is the only one involve in the market and the product been market is just one, a competitive market normally involve many companies. The college and algebra companies scenario describe competitive market because there are many companies that offer basically identical services and the clients can choose from any one of them. The companies have to put in extra work to win customers for themselves.