Suppose There Are Many Independent Dry Cleaners in Your City,each

question 102

Multiple Choice

Suppose there are many independent dry cleaners in your city,each of which provides essentially the same service.However,one offers local delivery,another offers free coffee in the shop,while another offers one- hour dry cleaning.Which of the following statements explains what is happening in this market?

• A)These firms are monopolistically competitive and are attempting to differentiate their product.
• B)These firms are perfectly competitive and are attempting to increase sales and maximize their profits.
• C)These firms are perfectly competitive and are engaging in strategic behaviour.
• D)These firms are oligopolistic and are engaging in strategic behaviour.
• E)These firms are perfectly competitive and are engaging in non- price competition.

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Definitions:

Cartel Members

Entities that agree to work together to control prices and market shares within an industry, inhibiting competition.

Market Demand Curve

A graph showing the relationship between the price of a good and the total quantity demanded by all consumers in the market at each price level.

Elastic Demand

A situation in which the demand for a product is sensitive to price changes, meaning the quantity demanded significantly increases or decreases as the price decreases or increases.

Copper Electrical Wire

A type of wire made from copper used for conducting electricity, known for its high conductivity and flexibility.