Market structures

Question 1

What is the spectrum of competition in market structures?

Answer 1

Market structures range from perfect competition at one end to pure monopoly at the other. In perfect competition, numerous firms sell identical products, and no single firm can influence the market price. In contrast, a pure monopoly consists of a single firm that controls the entire market supply and can set prices without competition.

Question 2

What factors distinguish different market structures?

Answer 2

1)Number of Firms: The total count of firms operating in the market
2)Degree of Product Differentiation: The extent to which products are perceived as unique or similar
3)Ease of Entry and Exit: The barriers that affect the ability of new firms to enter or existing firms to exit the market

These factors help categorize markets into structures such as perfect competition, monopolistic competition, oligopoly, and monopoly.