To determine the type of market structure the firm is operating in, we need to closely examine the characteristics of the given data and the conditions unique to different market structures.
1. Purely Competitive Market:
- In a purely competitive market, the price (hence marginal revenue) is equal to the marginal cost (i.e., [tex]\( P = MR = MC \)[/tex]).
- Here, we see that the marginal revenue is constant at [tex]$16 but the marginal cost is not equal to the marginal revenue (it varies and increases).
2. Monopolistic Market:
- In a monopoly, a single producer controls the entire supply of a product or service, creating a situation where the firm has significant power to set the price.
- However, monopolies typically have a downward-sloping demand curve, implying decreasing marginal revenue with increasing output, which doesn't align with the given data where marginal revenue is constant.
3. Oligopolistic Market:
- An oligopoly consists of a small number of firms whose decisions about production and pricing significantly affect each other.
- While it does involve some price-setting abilities, it doesn't typically guarantee a constant marginal revenue for the individual firms.
4. Monopolistically Competitive Market:
- This market structure features many firms selling differentiated products. Each firm has some control over its product price because of the differentiation.
- In this type of market, it is feasible that a firm can have some price-setting ability, hence a constant marginal revenue.
- The firm is likely not a price taker, suggesting the possibility that it's operating in a market where each firm has influence over the price, consistent with monopolistic competition.
Given that the marginal revenue remains constant at $[/tex]16 (indicating some control over price) and does not equal the marginal cost, the only market structure that aligns with these conditions is the monopolistically competitive market.
Therefore, the firm is selling its output in a monopolistically competitive market.
