if you were shopping for a new TV, would you prefer to buy one (a) under perfect
ID: 1159878 • Letter: I
Question
if you were shopping for a new TV, would you prefer to buy one (a) under perfectly competitive market conditions, (b) from a ) from an oligopoly or (d) under monopolistic competition market conditions? Explain your reasoning. What market structure would result in the lowest price? If you choose a market structure that doesn't offer the price, why did you choose it? In your answer, also be sure to explain the characteristics of each of these four market structures. Do this to explain the market structure you chose, and the three you did not.Explanation / Answer
** i don't know what explaination you get before, so i am providing my own expaination, if there is any isssue with the explainatin ask me in the comments**
- I will prefer the perfect competitive market to buy a new TV.
It is so because in perfect competition there is huge number of firms and as large number of firms means large competition and when there is huge competition in suppliers, the quality of the product rise and also the price fall down. So to get the benefit of lower pricers ( or to make consumer surplus) and to get the best quality, i will prefer a perfect competitive market to buy the TV.
The lowest price is offered by the perfect competition market because of its characteristic of large number of sellers so there is no influenece of any single seller on the price of the good. The price is decided by the industry at the market equlibrium. The firm in the perfect competition is Price taker. There is also homogeneous Product (i.e., ) the products made in this market are 100% identical. As the products are homogenoeus no seller could charge more from a consumer.
In this market, free entry and exit of firms in the market is allowed. Also Perfect Knowledge among buyers and sellers.
Due to these characteristics, firms in this industry cannot charge high price in order to earn profit unlike the other market structure.
Other market structure :
Monopoly : There is single seller and seller has full control over the supply. So we cannot get the best prices here as there is single seller, he/she could charge us in order to maximize his/her own profit. Also there is no close substitute available in this market structure, this also encourage the sellers to charge more. Thts why i do not choose monopoly over perfect competition.
Monopolistic competitive market : In this market, there are also large number of firms but less than that in the perfect competition, So prices charge by monopolistic competitive market is also high than that of perfect competition.
Oligopoly : In oligopoly market structure, there are only few large firms as there are few firms so they also have a partial effect on the prices. As they are big few firms, they also charges high to the comsumers.
If i choose a market structure that does not offer best price it is so because;
It means that i am choosing some other market other than perfect competition, it is so because perfect competition market is actually not exist in the real world, there is no real life example of perfect competition market. Or may be i want some differnt varieties of Tv to choose from. SO the second best option i will choose is the monopolostic competitive market.
In the monopolistic competitive market there are differentiate product means the are not 100% identical, also the firms have different prices. And there are close substitite available so i have large number of varieties to choose from. Also in this market structure there are more number of sellers ( not as much as in perfect competition ) o there is also competition among sellers, which benefit me in the price and quality of TV.
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