Small service sector industries are considered imperfectly competitive because:
A) the products and services they produce are differentiated.
B) ﬁrms can freely enter and exit the market.
C) there is a large number of players in the market.
D) the number of buyers in the market is very large.

Question

Quizplus · Accepted Answer

Small service sector industries often provide differentiated products or services, which means that each firm offers something that is not exactly the same as what other firms offer. This differentiation makes the market imperfectly competitive, as firms have some degree of market power to set prices above marginal cost, unlike in a perfectly competitive market where products are homogenous and firms are price takers.

Small Service Sector Industries Are Considered Imperfectly Competitive Because