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Market Structures: Competition, Monopoly, and Oligopoly

A. Describe the four market structures of pure competition, pure monopoly, monopolistic
competition, and oligopoly.
B. Under the monopolistic competition model where the vast majority of firms operate,
what role is played by product differentiation?
C. Why are entrepreneurs the most important people in the successful operation of many
firms?
D. Describe the Coase theorem and its approach to solving the externality problem.

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Describe the four market structures of pure competition, pure monopoly, monopolistic competition, and oligopoly.

Pure competition is the situation in which a large number of relatively small buyers and sellers interact. All firms aim to maximize their profits. There are no restrictions on entry into the industry and the firms in the industry have no advantage over potential new entrants. Firms and buyers are completely informed about the price of each firm's product. Pure monopoly is just the opposite of pure competition. There is only one firm in control of the manufacture and supply of a product which has no close substitutes. There is also a barrier that prevents the entry of new firms into the industry. On the other hand in ...

Solution Summary

The four market structures of pure competition, pure monopoly, monopolistic competition and obligopoly are described.

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