Explain how the number of producers in a market varies from one market structure to another...

Explain how the number of producers in a market varies from one market structure to another with relevant examples?

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Expert Solution

Ans) In Perfectly competitive market there are many small sellers selling homogenous products. Since all the sellers sell same product and they are too small to influence the market, price is decided by forces of demand and supply i.e firms are price takers. There no barrier to entry and exit. Eg- vegetable market, currency market etc.

In monopolistic competition, there are many sellers selling homogeneous but differentiated products. Due to product differentiation, selers have some pricing power i.e they are not price takers. There are no barrier to entry and exit. Eg- restaurants, salon, h&m, Gucci etc.

In oligopoly there are few large sellers who dominate the market. There are high barrier to entry and exit. Firms are price makers. Eg- airlines, aluminium etc.

In monopoly there is single seller selling unique product. There are very high barrier to entry and exit. Eg- de beers group, US steels etc.

Rahul Sunny answered 4 months ago

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