Question

Think a sector, write whether in that sector according to your opinion, perfectly competitive market form is more desirable then a market with monopolistic competition or the other way around. Explain your view, connecting it to positive and negative characteristics of two market forms. (You can define desirability the way you want)

Answer 1

PERFECT COMPETITION :

AN Perfect Competition Can be Defined as, In a Definate Market buyers and Sellers can avail the market information as whole. no one monitor or control over the market. In perfect competition an homogeneous product exist, it varies even a small percentage it is same product (or) output.

EX . AGRICULTURE , E - COMMERCE ETC...,

POSITIVE CHARACTERISTIC OF PERFECT COMPETITION :

From the above different sectors " Agriculture " is the most popular and conventional sector in india .And it is chracterized by many small producers with virtually no ability to alter the selling price of the products.

because the farmers have almost no control over the market price of their goods , the price that paid by the consumers to the product in the society is the perfect example for the pefect competition.

And many sellers and buyers in the market with that homogenous product. that means market is chracterised by free entry and exit

this kinds of conditions exist inthe market, which means "NO ONE CAN BE A PRICE MAKERS ,THEY ARE PRICE TAKERS " i.e ,they are well informed about the prices but , they cann't decide the price.

A GOOD SIGN IN THE PERFECT MARKET IS NUMBER OF SMALL FIRMS ARE EXIST.

NEGATIVE CHARACTERSTIC OF THE PERFECTCOMPETITION :

An perfect competition limition can be said as no barriers to enter into the market, any one can enter in to the market and make his own bussiness. here, there is chance of losing advantage of making good bussiness to the old firms.

Here, all the information avail in the market to both sellers as well as buyers. so, consumer desire to buy the homogenous product , so, he can purchase any where in the market.

An perfect competatitive Market is with full of competition , so, your share may decreases and shrinks the market.A competitive market force you to lower your prices to stay in the competition.

IMPERFECT COMPETITION:

the best example for the imperfect competition is monopoly and oligopoly etc..., An imperfect market is best to maximize the profits but whole market will be operated by the one big organization only, we can say that no can easily compete with this kind of organisation.

EX : TOURISM , HOTELS AND ETC...,

POSITIVE CHARACTERISTICS OF MONOPOLISTIC MARKET :

An monopolistic market is the example for the Imperfect competition. In this market product is non - homogenous (i.e ,HETEROGENOUS ), ASituation in which many firms with slightly different products are compete in the market.

In imperfect market conditions we can say, the existence of the competitors will be none in industry. other than the perfect market covered industries can taken under imperfect market .

First of all we say that Monopoly in the sense One buyer and many sellers we called as monopoly . imperfect market is very common in many industries for the maximize the profit.

EX. HOSPITALITY , HOTELS AND PUBS ETC..,

NEGATIVE CHARACTERISTICS OF MONOPOLISTIC MARKET :

First and Foremost negative impact on consumer is lower consumer surplus,i.e, higher prices in the monopoly markets face inelastic demand and so can increase prices .

In imperfect market an consumer doesn't have any other option if consumer desires to buy consumer have to pay the market decide price. it may possible diseconomies of scale.

In monopolies sellers restrict choice of consumers.for ex, consumer desire to buy 'X ' product but they sell exact product 'y' if consumer have no other choice and have to buy the product.

" THE MARKET IS WITH THE LIMITED NUMBER OF COMPETITIVE INDUSTRIES."

=> ATLAST WE CAN SAY THAT IF PERFECT COMPETATITIVE MARKETS ARE MORE SATISFY THE CUSTOMERS AND WE CAN SAY CONSUMER SURPLUS PROMOTE THE PERFECT COMPETITIVE AND IT MAY LEADS TO MAXIMIZE THE PROFITS ABOUT HOMOGENOUS PRODUCT.