Market Structures - 2710 Words

Kenya Institute of Management Diploma Course in Management Economics Work Based Assignment Done By: Daniel Mwathe Mugo Student No: NRB-44592 Table of Contents Question 2 Market Structures 3 Monopoly 3 Equilibrium Price and Output 3 Price Discrimination 5 Advantages of Monopoly 5 Disadvantages of Monopoly 6 Monopolistic Competition 6 Characteristics of Monopolistic Competition 6 Equilibrium level 6 Oligopoly 7 Features of Oligopoly 8 Competition and Collusion 8 Duopoly: A type of Oligopoly 8 Perfect Competition 9 Features/Characteristics or Conditions 9 Importance of Perfect Competition 10 Advantages of perfect competition 11 Disadvantages of Perfect Competition 11 Kinked Demand Theory of Oligopoly 12†¦show more content†¦when price is greater than marginal cost. Monopolistic Competition This occurs when a large number of sellers produce differentiated products. This market structure resembles Perfect Competition in that there are many sellers, none of whom have a large share of the market. It differs from perfect competition in that the products sold by different firms are not identical. Differentiated products are ones whose important characteristics vary. Personal computers, for example, have different characteristics such as speed, memory, hard disk, modem, size, and weight. Because computers are differentiated, they can sell at slightly different prices. Characteristics of Monopolistic Competition †¢ There are quite a large number of firms and buyers †¢ Product differentiation †¢ Free entry to and exit from the market †¢ High selling costs Equilibrium level As with other market structures, firms will maximize their profits where MC = MR. The diagram will be the same as for the monopolist, except the AR (demand curve) and MR curve will be elastic. In the short run, firms under monopolistic competition may make super normal profits or sub normal profits as shown in the figures below. Oligopoly Oligopoly is imperfect competition among the few; it applies to an industry that contains only a fewShow MoreRelatedMarket Structure Of The Company Essay1088 Words   |  5 PagesMarket Structure Introduction There are four types of market structures and they are monopoly, perfect competition, monopolistic competition, and oligopoly. What is a market structure? A market structure is â€Å"the makeup of the companies operating in a particular market.† Why is the market structure important to the producer as well as the consumer? It distinguishes the difference in seller numbers, buyer numbers, seller entry barriers, and buyer entry barriers. 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