Question

1: Assume the following demand and supply equations:

Demand: Q = 480 - 35P

Supply: Q = 200 +16P

What is the equilibrium Price? What is the equilibrium quantity?

2: Define the four product markets with at least one example of each example. How is the oligopoly market different from the other three types of market?

Answer 1

2.

There are generally four type of markets that are

Perfect competition, Monopoly, monopolistic market and oligopoly market

1.Perfect competition is a market structure type in which

There are large number of buyers and sellers in the market

Price is only decided by the market forces that is demand and supply

There are no barriers to entry and exit

The products are homogeneous in nature

2.Monopolistic market is a market structure type in which

There are large number of buyers and sellers in the market

long term economic profit is zero

Products are differentiated in nature in terms of shape, size, colour etc

3.Monopoly is a market structure type in which-

There is single seller and large number of buyers in the market

The single seller is a price maker

Long term economic profit is positive

There are barriers to entry and exit in this market

4.oligopoly market is a market structure type in which

There are few large sellers and large number of buyers in the market

Price is only decided by the few large large sellers

Long term economic profit is positive

They from cartes to have more market and price control

Example of perfect competition can be a vegetable or fruit market

The example of monopoly can be Indian railways or Microsoft

The example of oligopoly market can be oil and petroleum exporting countries that is OPEC

The example of monopolistic market can be toothpaste toothpaste industry and restaurant industry etc

So from the above explanation the oligopoly market can be differentiated from other markets because it can form cartels.

A cartel is a group of 7 to 10 members which come up together for better price in market control decisions

An example of this is oligopoly market of carswhere GM, Ford and Cryshler occupies the major market shares.