Describe the four basic types of market structures Although there are many diffe

Question

Describe the four basic types of market structures Although there are many different examples of economies in the world, all of them demonstrate one or more of the four basic types of market structure. For this assignment, in your own words, Identify the four basic market structures, in order, from the best for consumers to the being the best for producers. Describe each in terms of their distinguishing characteristics (e.g., monopolies have only one producer). Make certain you describe how the characteristic distinguishes the associated market structure from other market structures.

Explanation / Answer

MONOPOLISTIC MARKET STRUCTURE

1. THERE ARE LARGE NUMBER OF BUYERS AND SELLERS BUT LESS THAN PERFECT COMPETITION.

2. DIFFERENTIATED PRODUCT OFFERED BY ALL SELLERS.

3. FREE ENTRY AND EXIT FOR FIRMS IN THE MARKET.

4. SELLING AND ADVERTISING COSTS ARE PRESENT.

5. FACTORS OF PRODUCTION HAVE LESSER MOBILITY.

6. CONSUMERS DOES NOT HAVE THE PERFECT KNOWLEDGE OF THE MARKETS.

7. DEMAND IS MORE ELASTIC AS COMPARED TO OTHER MARKET FORMS BELOW.

OLIGOPOLY

1. THERE RAE FEW FIRMS BUT MORE THAN TWO.

2. FIRMS HAVE RELATIONSHIP AS REGARDS PRICE SET BY ONE FIRM AFFECTS THE OTHERS PRICING AND OUTPUT BOTH.

3. BARRIERS TO ENTRY ARE MORE AS COMPARED TO MONOPOLISTIC COMPETITION.

4. THIS MARKET STRUCTURE IS THE MOST COMMON MARKET TYPE IN THE WORLD.

5. PRODUCT DIFFERENTIATION EXISTS OVER HERE.

6. HIGH ADVERTISING EXPENDITURE IS REQUIRED.

DUOPOLY

1. OVER HERE THERE ARE ONLY TWO SELLERS OF A PRODUCT.

2. PRODUCTS ARE HOMOGENEOUS.

3. FIRMS COMPETE EITHER ON PRICE OR ON OUTPUT LEVEL.

4. THERE MAY OR MAY NOT BE COLLUSION AMONG THEM.

5. IT NOT FOUND EXCEPT IN RARE CASES LIKE BOEING AND AIRBUS.

MONOPOLY

1. THERE IS ONLY ONE SELLER.

2. THE FIRM IS A PRICE TAKER.

3. THE FIRM CAN CHARGE DIFFERENT PRICES FROM DIFFERENT CUSTOMERS.

4. THERE ARE NO CLOSE SUBSTITUTES FOR THE PRODUCT.

5. STRICT BARRIERS TO ENTRY EXIST, EITHER DUE TO LICENSE OR DUE TO TECHNOLOGY.

6. MONOPOLY ARE AGIN FOUND IN MANY ECONOMIES AND INDUSTRIES AS WELL.

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