Question

a) State the differences between the monopolistically competitive market and perfectly competitive market. Which market is better for consumers? Explain your answer with 5 examples from Bangladesh.

b) State the nature of current market structure in Bangladesh. Discuss the problems and prospects of market structure in Bangladesh with special reference from WASA, PDB, Agricultural products, commercial banks, and Ready-made garments (RMG).

Answer 1

a) A perfect competition market is that type of market ini which the numbers of buyers and sellers is very large,all are enlarged in buying and selling a homogenous product without any artificial restriction and processing perfect knowledge of the market at a time. in other words it can be said :"A market is said to be perfect when all the potential buyers and sellers are promptly aware of the prices at which the transaction take place .under such condition the price of the commodity will tend to be equal everywhere.

whereas,In a monopolistic market, firms are price makers because they control the prices of goods and services. In this type of market, prices are generally high for goods and services because firms have total control of the market. Firms have total market share, which creates difficult entry and exit points. Since barriers to entry in a monopolistic market are high, firms that manage to enter the market are still often dominated by one bigger firm. A monopolistic market generally involves a single seller, and buyers do not have a choice concerning where to purchase their goods or services.

Purely monopolistic markets are extremely rare and perhaps even impossible in the absence of absolute barriers to entry, such as a ban on competition or sole possession of all natural resources.

• In a monopolistic market, there is only one firm that dictates the price and supply levels of goods and services.
• A perfectly competitive market is composed of many firms, where no one firm has market control.
• In the real world, no market is purely monopolistic or perfectly competitive.
• In between a monopolistic market and perfect competition lies monopolistic competition or imperfect competition.
• In monopolistic competition, there are many producers and consumers in the marketplace, and all firms only have a degree of market control.

From the consumer point of view, perfectly competitive is the best type of market, because it gives consumers the greatest consumer surplus and maximizes total surplus for the economy.

Examples are:

1) Banking Industry in Bangladesh possess the characterstics of monopolistic competition of which two most iimportant is the liitle barriers to enter and reduced competition between sellers.

2)Railway in Bangladesh ha sthe monopoly in the market because of the support of Government.

3) Electricity supply is monopolized which has no subtitle.The public has to depend and buy the product from single centralized seller(government).

4) Agriculture market, street food vendors ,stock market ,foreign currency market are the example of perfectly competition market

5) demand supply condition,in such condition no big producer and government can intervence and contol the demand supply or price of goods and services.

ans:b)arket may either be a physical marketplace where people come together to exchange goods and services. Like as bazaar, shopping center etc.

types of market:

Physical Markets • Virtual Markets / Internet Markets • Auction Market • Consumer Markets • Industrial Markets • Black Market • Market for Intermediate Goods • Financial Market Types of Market

1. Physical Market A place where buyers and sellers physically meet that involve both parties in a transaction in exchange for money. Departmental Store Super Market
2. . Virtual Market Buyers purchase goods and services through internet. Buyers and sellers do not physically meet.
3. Auction Market Seller sells goods to one who is the highest bidder. Car Auction Player Auction Tea Auction
4. Consumer Market Made up of all the people who make decisions about what to buy and what not to buy. It’s about personal consumption. Super Market Departmental Store
5. Industrial Market (B2B) Market involves business to business sales of goods and services. These marketers do not target consumer markets.
6. 9. Black Market Where illegal goods like drugs and weapons are sold Black Ticketing Drugs Illegal Weapons
7. 10. Market for Intermediate Goods Used as inputs in the production of other goods including final goods
8. 11. Financial Market Financial market is a market where financial instruments are traded.

problems and prospects of market:

1)RMG:The garment industry of bangladesh has been the key bexport division and a main source of foreign exchange for the last 25 years.garment factoriesmin bangladesh provide employment to 40 percent of industrial workers. But without the proper laws the worker are demanding their various wants.Low working salary is another vital fact which makes the labor conflict. Insufficient government policy about this sector is a great problem in garments company.

2)WASA: Water management in Dhaka, the capital of Bangladesh and a city with 20 million inhabitants, faces numerous challenges such as flooding, poor service quality, groundwater depletion, inadequate sanitation, polluted river water, unplanned urban development, and the existence of large slums where more than one third of its population lives. Residents of Dhaka enjoy one of the lowest water tariffs in the world, which limits the utility's capacity to invest. The utility in charge of water and sanitation in Dhaka, DWASA, addresses these challenges with a number of measures. It says that in 2011 it achieved a continuous water supply 24 hours per day 7 days a week, an increase in revenues so that operating costs are more than covered, and a reduction of water losses from 53% in 2003 to 29% in 2010.^[1] For these achievements DWASA, got a "Performer of the Year Award" at the Global Water Summit 2011 in Berlin.^[2] In the future DWASA plans massive investment to replace dwindling groundwater resources with treated surface water from less polluted rivers located up to 160 km from the city.^[1] In 2011 Bangladesh's capital development authority, Rajdhani Unnayan Kartripakkha, made rainwater harvesting for new houses mandatory in an effort to address water scarcity and reduce flooding.

3)PDB:Problems in Bangladesh's electric power sector include high system losses, delays in completion of new plants, low plant efficiency, erratic power supply, electricity theft, blackouts, and shortages of funds for power plant maintenance. Overall, the country's generation plants have been unable to meet system demand over the past decade.
4)Agricultural products:Agriculture Laborers are facing series of problems which is mostly interlinked and multidimensional. Such as: low voice in society, no fixed working hour, no wage structure, wage discrimination between male and female laborer, selling advanced labor, exploitation by medieval & creditor, no compensation, no profit sharing system and absence of union & CBA rights.

5) Commercial bank:The eight state-owned commercial and specialised banks suffer from problems related to high levels of non-performing loans (NPLs), low profitability, large capital shortfalls and balance sheet weaknesses. The root of the problem is poor risk management.

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