Select one business and discuss the type of business structu

Select one business and discuss the type of business structure this firm has. Discuss the following questions: 1. Identify the business and determine the general type of business structure—perfectly competitive, monopolistically competitive, oligopoly, or monopoly. 2. Name the attributes of this business that you believe determines its market structure. 3. Why did this firm select this type of business structure?

Solution

Choice of business: Non-branded apparel.

(1) It is a perfectly competitive industry.

(2) The identifiers are:

a. There are large number of buyers & sellers.

b. Firms produce identical (almost identical) goods.

c. There is no barrier to entry and exit.

d. No single firm has control over market share, so each firm is a price taker.

(3) This market structure is a good selection for such a firm because even though firm cannot set a (random) price, lower price is offset by high sales volume, since there is a large number of buyers. Also, initial fixe costs are not too high, making entry easier.