For each of the following scenarios, identify the number of firms present, the type of product, and the appropriate market model. Select the matching entry for each dropdown box in the following table. Scenario Number of Firms Type of Product Market Model
1. A large city has lots of small shops
where people can buy sweaters.
Each store's sweaters reflect the
style of that particular store.
Additionally, some stores use higher
-quality yarn than others, which is
reflected in their price.
2. There are dozens of pasta producers
that sell pasta to hundreds of Italian
restaurants nationwide. The restaurant
owners buy from the cheapest pasta
producer they can. While pasta manuf-
acturers must pay licensing fees to their
local government and undergo regular
food-safety inspections, anyone who
has passed inspections can acquire and
maintain their license.
3. Only three airlines fly from San Francisco
to Medford, Oregon. No new airline will enter
this market, because there are not enough
customers to share among four or more
airlines without each one experiencing
substantially higher average costs. Consumers
view all airlines as providing basically the same
service and will shop around for the lowest price.
4. The government has granted a patent to a drug
company for an experimental AIDS drug. That
company is the only firm permitted to sell the drug.

The scenarios and their various market characteristics are as follows:

Scenario      Number of firms        Type of Product            Market Model

     1                   Many                       Differentiated                 Monopolistic

     2                  Many                      Standardized             Perfect competition

     3                   Few                         Standardized                   Oligopoly

     4                   Single                       Unique                           Monopoly

Scenario 1 is a monopolistically competitive market where there are several firms who sell similar but differentiated products to gain market share.

Scenario 2 is a perfectly competitive market that has many firms. These firms all sell the same goods which means that they are standardized.

Scenario 3 is an oligopoly as it has very few players in the market and these players control the market and offer the same product.

Scenario 4 is a monopoly that has one firm in the market thanks to the government patent. The product is therefore unique because it is made by one firm.

In conclusion, there are several market types available.

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Answer and Explanation:

The Perfect competition is a market condition in which there are very large number of buyers and sellers that sell the same or identical products having perfect knowledge with respect to products and services. Moreover, there is free entry and exit in this market

Monopolistic competition is a market condition that deals with many firms that are closely related to each other but sell differentiated products. Moreover, there is free entry and exit in this market

In the monopoly market, there is only one seller who controls the overall market. Due to this, the seller charged the high price as there is no competition. There is no free entry and exit in this market

In the oligopoly market, there are few sellers who deal in a single market. There is no free entry and exit in this market

Based on the above explanation, the categorization is shown below:

Scenario        Number of Firms      Type of                             Model

                                                         Product Market

1.                     Many                           Differentiated product  Monopolistic

2.                    Many                           Standardised products Perfect

                                                                                                  Competition

3.                   Few                              Differentiated products Oligopoly

4.                   One                              Unique                            Monopoly

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