Classify the following markets as perfectly competitive, monopolistic, or monopolistically competitive, and explain your answers. Wooden no. 2 pencils
Copper (hint: there are many sellers)
Local public utilities (ex. water, electricity)
Peanut butter
Lipstick

Wooden no. 2 pencils

Perfectly competitive market because there are many buyers and suppliers of pencils. Also, wooden no. 2 pencils are basically identical no matter which brand you purchase.

Copper (hint: there are many sellers)

Copper is considered a commodity which has many suppliers and consumers around the world, therefore, it is classified as a perfectly competitive market. No individual supplier, nor any individual consumer has enough market power to affect the price and supply of copper.

Local public utilities (ex. water, electricity)

Monopolistic market because there are generally only one supplier of each type of public utilities, e.g. one water company per city.

Peanut butter  

Monopolistically competitive markets since there are many consumers and suppliers, but each supplier produces a slightly different product. Even though there are several peanut butter brands, no two brands offer the same peanut butter.

Lipstick

Monopolistically competitive markets since there are many consumers and suppliers, but each supplier produces a slightly different product. Even though there are several lipstick brands, no two brands offer the same lipstick.