Market Structure

Question 1

Perfect competition

Answer 1

Perfect information
Large number of sellers
Free entry and exit
Goods are homogeneous
Not a non-price competition because information is perfect and goods are homogenous
Price-taker

Question 2

Monopoly (imperfect competition )

Answer 2

Imperfect information
Goods are homogenous
Entry barrier and exit
Only 1 seller with no close substitutes
Non-price competition because imperfect information
Price-taker

Question 3

Monopoly examples

Answer 3

MTRC of railway service, water supply department, town gas

Question 4

Source of monopoly

Answer 4

Governemnt franchise- government grants the firm to be the only supplier of certain goods and service, other firms cannot enter the market. (KMB)
Government ownership- government owns the industry and other sellers cannot enter the industry.

Question 5

Oliogopoly

Answer 5

Few dominant seller
Entry barier because huge capital requirement
Goods are heterozygous
Imperfect information
Price-searcher
(Banking, supermarkets, television broadcasting)
Non-price competition

Question 6

Monopolistic competition

Answer 6

Many sellers and buys
Goods are heterozygous
Imperfect information
Easy entry and exit
Price-searcher
(Fashion retailing, hairdressing, shop selling computer services)