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In: Economics

Find real a life example of a market that comes close to operating like a "perfect...

  1. Find real a life example of a market that comes close to operating like a "perfect market".                                                                                                                                 Discuss the characteristics this market structure has that makes it operate like a perfectly competitive market.        

2. Is monopolistic competition closer to competition or closer to monopoly? Discuss with examples.

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Expert Solution

a) Agriculture market is an example of perfect market condition for example, Rice market. Here, all the goods are same i.e. perfect substitute of each other. People know about the product, they have all the information about it. the price of the goods are decide by the market and there is a free entry and exit in the market.

All these characteristics make it a perfect market condition .

b) A monopolistic competitive market is more closer to the perfect market condition than to the monopoly. It allow the free entry and exit in the market, there are many firms in the market and there is no profit in the long run and the goods are close substitute to each other. IN a monopoly, there is only one firm and no substitute and they make profit in the long run.

For example, A coffee restaurant is in a monopolistic competition, as there are many firms and they are selling more or less the same product.

Rahul Sunny answered 1 year ago
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