From Example 1

Multiple Choice

From Example 1.2 in the textbook, Pindyck and Rubinfeld distinguish between the mass market and dealer market for bicycles. Although there are many dealers in the U.S. and only a few mass merchandisers, we should expect the dealer market to be somewhat less competitive than the mass market. Why?

A) Due to their differences in quality and performance, dealer bicycles are not close substitutes.
B) The geographic extent of the market for dealer bicycles is typically small, so the individual sellers do not have many local competitors.
C) Dealers are small sellers and have little control over bicycle prices.
D) A and B are correct.
E) B and C are correct.