Multiple Choice
Which factor determining competition is typically considered Walmart's competitive advantage?
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3. The Market Forces of Supply and Demand
Competitive Markets
Multiple Choice
The competition in food retailing could best be characterized as which of the following?
A
Monopolistic competition
B
Monopoly
C
Perfect competition
D
Oligopoly
Verified step by step guidance1
Understand the characteristics of each market structure: Monopoly (single seller, unique product), Perfect competition (many sellers, identical products), Oligopoly (few sellers, products may be identical or differentiated), and Monopolistic competition (many sellers, differentiated products).
Analyze the food retailing market: there are many sellers (supermarkets, grocery stores, convenience stores), each offering similar but not identical products (different brands, store brands, services).
Recognize that sellers have some degree of market power due to product differentiation, but there is free entry and exit in the market, which rules out monopoly and oligopoly.
Compare these features to the definitions and conclude that the market structure with many sellers offering differentiated products and free entry is monopolistic competition.
Therefore, characterize food retailing as monopolistic competition based on the presence of many competitors and product differentiation.
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