1. Characteristics of competitive markets The model of competitive markets relies on the following four core assumptions: 1. There must be many buyers and sellers, none of which is large in relation to total sales or purchases. In other words, a few players can't dominate the market. 2. Each rm produces and sells a homogeneous product that is indistinguishable from all other rms' products in a given industry. That is, buyers must regard all sellers' products as equivalent, or identical. 3. Buyers and sellers have all relevant information about prices, product quality, sources of supply, etc. 4. Firms have free entry into and exit from the industry. New rms can enter the market easily, and existing rms can exit the market easily. There are no barriers to entry or exit. The rst three assumptions imply that all consumers and rms are price takers. The nal assumption is not necessary for price-taking behavior, but guarantees that a market remains competitive in the long run. Identify whether or not each of the foiiowing scenarios describes a pen'ecy competitive market, aiohg with the correct expianation of why or why not. Identify whether or not each of the following scenarios describes a perfectly competitive market, along with the correct explanation of why or why not. Senna rio Perfecy comp-elitiyre? The government has granted a patent to a pharmaceutical company for an experimental V AIDS drug. That company is the only rm permitted to sell the drug. In a small town, there are two providers of broadband Internet access: a cable company 7 and the phone company . The Internet access offered by both providers is of 'die same speed. Several stores in the mall sell hooded sweatshirts. Each store's sweatshirts reect the 7 style of that particular store. Additionally, some stores use higher-quality cotton than others, which is reected in the apparel's prices. Dozens of companies produce plain white socks. Consumers regard plain white socks as V standardized and don't care who manufactures their socks