Q. 1 Explain why the following are ex... [FREE SOLUTION]

Chapter 25: Q. 1 (page 575)

Explain why the following are examples of monopolistic competition.
a. There are a number of fast-food restaurants in town, and they compete fiercely. Some restaurants cook their hamburgers over open flames. Others fry their hamburgers. In addition, some serve broiled fish sandwiches, while others serve fried fish sandwiches. A few serve ice cream cones for dessert, while others offer frozen ice cream pies.
b. There are a vast number of colleges and universities across the country. Each competes for top students. All offer similar courses and programs, but some have better programs in business, while others have stronger programs in the arts and humanities. Still others are academically stronger in the sciences.

Short Answer

Expert verified

(a) There are several vendors trying to offer unique product inside a monopolistic market, or there are no hurdles to resolute entry or exit. As a direct consequence, the situation has the looks of monopolistic competition.

(b) There are a range of universities that offer different programs. There's also a huge competition. There seems to be hegemony as an outcome of this.

Step by step solution

Introduction.

When several businesses in a particular sector offer a selection of items which aren't similar, increasing competition. With businesses, such firms have little ability to restrict supply or increase costs in order to turn a profit.

Given Information (part a).

To discover why it's such a monopolist.

Explanation (part a).

When there are no barriers to resolute arrivals and departures, a monopoly market structure has several vendors offering a variety of products.

The current situation qualified as a monopoly. There are numerous sellers in this industry, but there is brand recognition.

As an outcome, the situation resembles monopoly power and therefore should be treated as such.

Given Information (part b).

To find the cause of monopoly market.

Explanation (part b).

There really are innumerable schools and colleges that give one-of-a-kind projects. There seems to be a lot of competition. Like a result, monopolistic competition exists.