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Matching the Business to the Market Structure
Directions: Read the descriptions of the businesses provided. Analyze each description, identify the market structure that best characterizes the business, and explain your reasoning. The four market structures are:
pure competition
oligopoly
monopolistic competition
monopoly
Healthy and Hearty Soups: Healthy and Hearty Soups produces a variety of soups. There is considerable competition in the soup market. However, Healthy and Hearty Soups has spent several million dollars on an advertising campaign to convince consumers that their soups are healthier than all other soups. Because of this advertising, Healthy and Hearty Soups charges a higher price than other soups on the market.
Type of Market Structure: ___________________________________
Reason:_________________________________________________________________
___________________________________________________________________________
Bill's Salmon Supplier: Bill's Salmon Supplier sells fresh salmon to local seafood restaurants. Every morning Bill sails out to sea to catch salmon, and each afternoon he returns to sell his catch to local restaurants. There are hundreds of other fishers catching and selling salmon. Because the salmon Bill catches is just like the salmon caught by the other fishers, he can't raise his price.
Type of Market Structure: ___________________________________
Reason:_________________________________________________________________
___________________________________________________________________________
County Cable: County Cable supplies cable access to all local residents. It was a very expensive business to start. The entrepreneurs who started County Cable had to provide underground wire for the entire community. Other companies tried to compete, but the start-up costs were simply too high.
Type of Market Structure: ___________________________________
Reason:_________________________________________________________________
___________________________________________________________________________
Perfect Picture Cameras: Perfect Picture Cameras is a national camera company. It competes with a couple of other national camera companies. In order to gain an upper hand in the market, Perfect Picture Cameras has differentiated its camera by including an automatic focus and flash. Perfect Picture Cameras has the ability to raise its prices because of its unique features. However, federal regulators are always watching the company to ensure that no collusion occurs with other camera companies.
Type of Market Structure: ___________________________________
Reason:_________________________________________________________________
___________________________________________________________________________
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