Question

characteristics of perfect competition, monopoly, monopolistic competition & oligopoly

Answer 1

Characteristics of perfect competition are as follows:

1. Free entry and exit of the firms

2. Homogeneous products produced by the firms

3. Zero economic profit in the long run

4. Firms are price takers

Characteristics of monopoly competition are as follows:

1. Entry barrier in the market

2. Only one firm in the industry

3. Inefficiencies in the market

4. positive economic profit in the long run

5. Firm is price maker

Characteristics of monopolistic competition are as follows:

1. Free entry and exit of the firms

2. differentiated products produced by the firms

3. Zero economic profit in the long run

4. Firms are price makers

Characteristics of oligopoly competition are as follows:

1. Entry barriers in the market

2. Few large firms in the industry

3. interdependence among the firms

4. Firms form cartel in the market

5. Firms can earn positive, zero or negative economic profit in the long run