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<div class="txt-body question-body"><div class="feedback-rating abuse-flag" data-questionid="12253439"></div><div class="ugc-base"><p>Describe the four basic types of market structures. Althoughthere are many different examples of economies in the world, all ofthem demonstrate one or more of the four basic types of marketstructure.</p><p>1) For this assignment, <strong>in your own words</strong>,Identify the four basic market structures, in order, from the bestfor consumers to the being the best for producers.</p><p>2) Describe each in terms of their distinguishingcharacteristics (e.g., monopolies have only one producer). Makecertain you describe how the characteristic distinguishes theassociated market structure from other market structures.</p><p>********ANSWER PROBLEM 2 ONLY***********</p></div></div>

Explanation / Answer

&lt;div class=&quot;txt-body answer-body&quot;&gt; &lt;div class=&quot;answer-given-body ugc-base&quot;&gt; &lt;p style=&quot;text-align:justify;&quot;&gt;The four types of market structureare - Perfect Competition, Monopoly, Monopolistic Competition andOligopoly.&lt;/p&gt;&lt;p style=&quot;text-align:justify;&quot;&gt;1. Perfect competition- It is themarket structure in which there are large number of firms sellingidentical products, there are no restrictions on entry and exit offirms, firms are the price takers in the market, it is allocativelyefficient as price is equal to marginal efficient.&lt;/p&gt;&lt;p style=&quot;text-align:justify;&quot;&gt;2. Monopoly - It is the type ofmarket structure in which there exists a single seller of theproduct with no close substitutes, there are barriers to entry dueto patents, copyrights, trademarks, existence of naturalmonopolies, sole aim is profit maximization. They are not efficientas prices exceed Marginal cost and there is dead weightloss.Profits are above normal both in short and long run due tobarriers to entry. Example - US Postal Services&lt;/p&gt;&lt;p style=&quot;text-align:justify;&quot;&gt;3. Monopolistic Competition- Thereare large number of firms selling products that are closesubstitutes of each other. There is relatively free entry and exitas compared to monopoly and oligopoly but not as free as in thecase of perfect competition. They are profit maximizers and thereexists excess capacity and deadweight loss.Profits are normal inlong run.&lt;/p&gt;&lt;p style=&quot;text-align:justify;&quot;&gt;4. Oligopoly- In this case, thefirms are interdependent and there are few firms in the market eachhaving a significant share. It might be collusive or non collusive.There are different models for both. There exists barriers to entryas the incumbent firms may reduce prices below the average cost toprevent the entry of other firms. Example - Cartel of OPEC&lt;/p&gt;&lt;p style=&quot;text-align:justify;&quot;&gt;&lt;/p&gt; &lt;/div&gt; &lt;/div&gt;

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