Which of the following is an example of a monopolistically competitive business in Australia?

Question

BlackTom AI · Accepted Answer

A hairdresser operates in a market characterized by many small sellers, differentiated products, and easy entry and exit, which are the hallmarks of monopolistic competition.

1. Relevant knowledge points and concepts
- Monopolistic competition: many firms, product differentiation (non-price traits like style, service, location), some degree of price-setting power, low barriers to entry/exit, and competition on quality, branding and convenience.
- Oligopoly: few large firms, significant barriers, strategic interaction (example: airlines, supermarkets).
- Natural/regulated monopoly: single provider due to high fixed costs and infrastructure (example: electricity networks).

2. Step-by-step reasoning
- Identify market structure features for each option and compare with monopolistic competition criteria.
- Hairdressers: many independent salons and stylists, each offering distinct services, reputations, locations and prices. Customers choose based on style, service quality, convenience — demonstrating product differentiation. Entry costs are relatively low, so new salons can open, ensuring many competitors and limited long-run economic profits. Firms have limited but real price-making ability due to differentiation.
- National airline: dominated by a few major carriers, high fixed costs and regulatory/commercial barriers — fits oligopoly.
- National electricity provider: typically a regulated monopoly for transmission/distribution due to large infrastructure and economies of scale — not monopolistic competition.
- Major supermarket chain: concentrated market with a few large firms benefiting from scale economies and strong market power — oligopolistic.

3. Calculations
- No numerical calculations are required for classification reasoning.

4. Why the correct answer is correct
A hairdresser matches all key features of monopolistic competition: many sellers, differentiated offerings, some price control, and low entry barriers.

5. Why other options are incorrect
- National airline: oligopoly (few firms, high barriers).
- National electricity provider: natural/regulated monopoly (infrastructure-dependent).
- Major supermarket chain: oligopoly/oligopsonistic features (few dominant chains).

6. Conclusion
Therefore, the correct answer is A hairdresser, which matches the provided answer.

Which of the following is an example of a monopolistically competitive business in Australia?单项选择题

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