Question

Suppose that at a local farmers' market there are a large number of vegetable sellers. Some sell zucchini, some sell broccoli, some sell Brussels sprouts, and so on. This week, the zucchini sellers decide to gang together and fix the price of zucchini at a price higher than they would sell otherwise. Which of the following statements is most likely true?

a. The zucchini sellers will not sell any zucchini.
b. The zucchini sellers will be able to earn a lot more money.
c. The zucchini sellers have limited market power because consumers have many alternatives.
d. The zucchini sellers will enjoy a large degree of market power.

Answer 1

Answer: c. The zucchini sellers have limited market power because consumers have many alternatives.

Explanation:

As the Zucchini sellers have fixed the price such that it is the same for all of them, they will have market power in the sale of Zucchini.

In terms of the whole market however, they will have only limited power because even though they control the pricing of Zucchini, there are other alternatives there that they do not control and can be switched to by other consumers.

Answer 2

The true statement is the zucchini sellers have limited market power because consumers have many alternatives.

What is a monopolistic competition?

A monopolistic competition is when there are plenty sellers of unidentical goods and services in an industry.

A monopolistic competition has characteristics of both a monopoly and a perfect competition. The demand curve in a monopolistic competition is downward sloping.

Broccoli is a substitute for zucchini. So, if zucchini sellers increase the price of their good, consumers can begin to consumer more broccoli.

To learn more about monopolistic competition, please check: https://brainly.com/question/1622043