Question

Please define, compare, and contrast the following economic market structures: Monopoly: Monopsony: Oligopoly: Collusive Oligopoly: Monopolistic Competition:

Answer 1

Ans:-

Monopoly:-Monopoly is a market arrangement characterized by a single seller,selling a distinctive productive in the market.In monopoly there is no competition arise because which has no close substitute in the market .In the absence of substitute product in the market ,the monopolist is free to fix price of his choice.

Monopsony:-The monopsony is a market situation here a single person /purchaser significantly controls the market as the main purchaser of products and services ,several sellers are here.

Oligopoly:- Oligopoly is a type of market or industrial structure.In the oligopoly markets are controlled by a small group of large of large sellers.Oligopoly causes several forms of involvements that decreases the mrket competition that naturally leads to higher price for buyers.Oligopoly have its own market structure.

Collusive oligopoly:- Collusive oligopoly is a type of oligopoly market where some firms create a collusive agreement inorder to avoid competition in the market .And they fix a price of the products which is acceptable to all the firms in the market.

Monopolistic competition:-The monopolistic competition combines the characteristics of monopoly and competitive market.It is a type of market condition in which each seller produce a differentiated products.But there is freedom of entry and exit for other firms.Because of freedom of entry to the market,supernormal profit will encourage more firms to enter the market and they became the price makers and as a result in the long run this will leading to normal profit.