Question: Categorize each seller below on the basis of the type of market it operates in. Explain each of your answers:
a. A Cattle farmer
b. A Computer market
c. A picture framing shop is a large metropolitan area.
d. A seller of Canadian dollars in a foreign currency markets.
e. A life insurance company
f. A liquor store in a remote village
g. A visual Artist
h. A Country that produces a valuable radioactive mineral found in no other part of the world.
Answer to the question no. 1
a. A Cattle farmer This is a Perfect Competition Market. There are many sellers and buyers, product is standardized and there are almost no entry or exit barriers.
b. A Computer market Monopolistic Competition Market: Computer knowledge is required to be in this market, there are fairly number of buyers and sellers. This is a service oriented market. There are almost no entry or exit barriers.
c. A picture framing shop is a large metropolitan area. Monopolistic Competition: Only people with picture framing skill and have good taste of picture are sellers and buyers in this market. It is a service oriented industry and there are ways to differentiate by providing superior quality of service. There are almost no entry or exit barriers.
d. A seller of Canadian dollars in a foreign currency markets. It is a Perfect Competition market with standardize product and there are many buyers and sellers. There are almost no entry or exit barriers.
e. A life insurance company It is an Oligopoly. Entry and exit is regulated, product is almost standardized. There are entry or exit barriers.
f. A liquor store in a remote village It is a Monopoly: Being in this business required special license from government authority. In a remote village government would like to regulate the item by permitting a single seller in the business (depends on cultural background of a country). As such entry and exit will be difficult. Product is standardized.
g. A visual Artist It