Question

Perfect competition exists when

•Many firms sell an identical product to many buyers.

•There are no restrictions on entry into (or exit from) the market. (QUESTION: EXAMPLES IN OMAN)

•Established firms have no advantage over new firms.

•Sellers and buyers are well informed about prices. (QUESTION: SITUATION IN OMAN)

<Other Market Types (QUESTION: EXAMPLES IN OMAN for each type)

Monopoly is a market for a good or service that has no close substitutes and in which there is one supplier that is protected from competition by a barrier preventing the entry of new firms.

Monopolistic competition is a market in which a large number of firms compete by making similar but slightly different products.

Oligopoly is a market in which a small number of firms compete.

Answer 1

• Under perfect competition, there are large number of buyers and sellers and the products are identical. In such competition, price is decided by the forces of demand and supply. There is fixed price in the market for similar products. Therefore, the AR=MR=Price in this completion.

• Also the firms do not earn abnormal profits or abnormal losses in long run. The firms earn normal profits only. Perfect competition is opposite to monopoly competition. Under this competition, prices are reflected by demand and supply. Homogeneous products – There are large number of buyers and sellers in such form of market. The sellers are small firms, which supply homogeneous products and prices are adjusted by demand and supply forces. The features, capabilities of the products are identical.

• In OMAN, the competition protection of monopoly centre prevents the monopolistic practices by the companies in the country. Monopolistic competition refers to a form of market in which there are large number of buyers and sellers, selling closely related product and has limited control over price.

• Also, warned the companies to follow these rules and regulations and avoid over competitiveness among the companies which leads to increase in demand of some product only. Legal actions would be taken by the government in case of violation of such legal regulations by businesses.

• Monopoly refers to a form of market in which there is only one seller and large number of buyers. This competition is entirely different of perfect competition. In such form, one large company selling product which has no close substitute which means the firm earns abnormal profits in long run. The price is also fixed by one seller because there is only one firm in the industry.

• In OMAN, there is online monopoly of some brands. But otherwise, there is anti-monopoly laws and regulations. These provisions are applicable to all production, trading or services inside or outside the OMAN. Under this law, the large dominance of few companies is avoided and such activities are prohibited in that place.

• Oligopoly is imperfect competition in which few firms have the control all over the market. These firms face cutthroat competition. For example: automobiles industries are the best examples of oligopolies.