Among monopoly, oligopoly, monopolistic competition, and perfect competition, how would you classify the markets for each of the following drinks? a

• Tap water

This will come under perfect competition.

Reason- tap water is easily available for everyone therefore, huge number of sellers will be there, no barriers to entry and exit and homogeneous good is being sold which has perfect substitutes.

However, supply of tap water comes under monopoly because there are few suppliers of water and high entry barriers.

• Bottled water

This will come under monopolistic competition.

Reason- many businesses are there and there is no control on the prices of bottled water, each firm has only normal profit in the long run because no changes and innovation can be made in bottled water which can increase its value and can allow producers to sell at higher rates.

• Cola

This will come under oligopoly.

Reason- cola companies use different flavors to prepare their drinks which will restrict the number of sellers in the market, high entry barriers because companies need to patent their drinks so that no one can copy the flavor, also, sellers can set prices according to the taste quality of their drinks.

• Beer

This will come under oligopoly.

Reason- high entry barriers due to requirement of government licensing and patent, there is product differentiation in beer market because process of preparing beer and the quality of beer will be different, seller can earn long term profits by changing the prices according to the quality of beer.