a) What are the conditions for a perfectly competitive market?
b) What are the conditions for a monopolistic market?
c) What are the conditions for a monopolistic competitive market?
d) What are the conditions for an oligopolistic market?
e) How would you explain the differences among these market structures? Identify which market structure your organization competes in and why you think so.
f) What are some real-life examples of monopolistically competitive, oligopoly, and monopoly markets?
In order to answer these questions, the following general information given below should help:
In a perfectly competitive market, there are usually many buyers and sellers who are all price takers; there are homogenous products i.e. all sellers supply the same identical product; and firms can freely enter and exit the market. You hardly find perfectly competitive market in real life.
Under a monopolistic market, there is only one sole seller of a particular product and that seller is able to set prices at as high a level as possible since they are the only suppliers. Note the following excerpt:
"A monopolistic market is a type of market that features one, if not all, of the traits of a monopoly such as high price levels, supply constraints, or excessive barriers to entry. Because this type of market would be comprised of one supplying firm, consumers would have no choice but to purchase solely from this firm. Without proper legislation or controls, this firm possesses the power to raise prices without adversely affecting demand for its products/services. This type of market stands in contrast to a perfectly competitive market."
Clearly after reading this you may note that one of ...
This solution provides you with information related to the conditions that exist under a perfectly competitive market, a monopolistic market, a monopolistic competitive market and an oligopolistic market. It also explains the differences among market strutures and gives real-life examples of each.