Question

Describe the various market structures: perfect competition, monopoly, monopolistic competition, and oligopoly.

Answer 1

1 A perfect competition is a market structure type in which-

• there are large number of buyers and sellers in the markets
• the price is decidedonly by the market forces that is demand and supply
• There are no barriers to entry and exit
• It is assumed that both buyers and sellers are perfect knowledge about the market

2

If we talk about Monopoly then in this

• there is single selller and large number of banks in the market
• the price is decided only by the singer season
• It is also called price maker because there are very high barrier to entry and exit in the market
• in this market long term economic profit is zero

3

if we talk about monopolistic competition then in this

• there are large number of buyers and sellers in the market
• there are few barriers to entry and exit in the market
• price is decided somehow by the buyers sellers in the market their
• They influence the price a little bit
• long term economic profit is zero market plan in this market.

4

If we talk about oligopoly market then in this market -

• there are few sellers and there are a large number of buyers in the market
• There is very high barrier to entry and exit in the market
• They form cartels to have market and price control