Micro Chapter 12 Market Structures

Question 1

What are the features of perfect competition ?

Answer 1

1. Large number of sellers
2. Homogeneous products
3. Free entry and exit
4. Perfect market information
5. Sellers are price takers
6. No non-price competition

Question 2

What are the features of monopolistic competition ?

Answer 2

1. Large number of sellers
2. Free entry and exit
3. Hetrogeneous products
4. Imperfect market information
5. Sellers are price searchers
6. Engage in both price and non-price competition

Question 3

What are the features of oligopoly ?

Answer 3

1. There area a few dominant sellers in the market
2. Oligopolistic sellers are interdependent
3. The products can be homogeneous or hetrogeneous
4. There are entry barriers
5. Imperfect market information
6. Sellers are price searchers
7. Prices of products sold by oligopolists tend to be rigid
8. Price leadership
9. Non-price competition is common