Question

Compare and contrast the four different market structures (perfect competition, monopoly, monopolistic competition, and oligopoly). Select an organization with which you are familiar and identify the market structure of that organization. Evaluate the effectiveness of this structure for the organization. For your selected organization, summarize the factors that affect labor supply and demand.

Answer 1

MARKET STRUCTURE

Following were the different kibds of market structure that characterized the economy are:-

PERFECT COMPETITION

It is describe as the markwt where large number of small firms compete against each other.In this market single firm does not have significant power.

The idea of perfect competition builds on several assumptions:

(1) all firms looking for maximization of their profits

(2) there is free entry and exit to the market,

(3) all firms sell completely identical (i.e., homogenous) goods,

(4) there are no consumer preferences.

MONOPOLY

It is the type of market structure where single firm control the entire market in the economy.In this kind of market firm has the highest level of market power.

The following assumptions are made when we talk about monopolies:

(1) the monopolist maximizes profit,assingle firm controls the market.

(2) it can set the price,

(3) there are high barriers to entry and exit,

(4) there is only one firm that dominates the entire market.

MONOPOLISTIC COMPETITION

Monopolistic competition refers to a market structure, where a large number of small firms compete against each other. But, unlike in perfect competition, the firms in monopolistic competition sell similar, but slightly differentiated products.

Monopolistic competition builds on the following assumptions:

(1) all firms maximize profits

(2) there is free entry, and exit to the market,

(3) firms sell differentiated products

(4) consumers may prefer one product over the other.

OLIGOPOLY

This kind of market competition is dominated by only the small number of firms.It is confined to limited completion.

The oligopolistic market structure builds on the following assumptions:

(1) all firms maximize profits,

(2) oligopolies can set prices,

(3) there are barriers to entry and exit in the market,

(4) products may be homogenous or differentiated, and

(5) there is only a few firms that dominate the market.

An example of a real-life monopoly could be MONSANTO

Monsanto Company has taken over seed monopoly worldwide, it forced the farmers to use GMO seeds without a choice.That is because there are very few alternative seeds sources.Hence, the world is losing renewable agriculture.In that, there is no longer the choice of using the old practices where you could save seeds and replanting them during the next season.The only solution to saving this situation is making patenting of seeds, plants, and genes all illegal.