Understanding Market Structures Market Structure is the one of the important ele

Question

Understanding Market Structures

Market Structure is the one of the important elements to understand how market will function determine the behavior of firms in the market and the outcome that will be produced by the market. In economics term, market structure is the number, size, kind and distribution of buyers and sellers. Market Structure comprise of four types of markets namely; perfect competition, monopoly, oligopoly and monopolistic competition. Keeping in view the four types of markets, answer the following questions.

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QUESTIONS:

Question 01: Highlight main similarities and dissimilarities in ALL market structures?

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Question 02: In perfect competition and monopoly, Profit is maximized at that level of output (Q) where MC = MR, if this is so what is difference between both market structures?

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Question 03: How output and prices are determined in Perfect Competition and Monopoly?

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Question 04: Product Differentiation, Price Discrimination and Cartels Formation are the main characteristics of which market structure; explain briefly?

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Question 05: If the government announces to impose custom duty on the raw material being imported by the industry; how it will affect the output and prices in both perfect competition and monopoly market structures.

Explanation / Answer

Qi Ans)----

B) Monopolistic market and monopoly are similar in the transport cost effect price. And similar in the commercial bars. Buyers and sellers have imperfectly mobility in monopoly market and same as in the monopolistic market.

C). oligopoly, monopoly and monopolistic are the price maker in the firm.

2.   Dissimilarities of the market structure.

A) Perfect competitive market are large number of buyers and sellers but there is a few numbers of buyers and sellers in the monopoly market.

B) Monopoly has produce product differentiate but competitive market has produce homogenous products. The demand cure of the competitive market is perfectly elastic but monopoly, oligopoly and monopolistic market demand curve are less elastic.

Q2Ans=====

Both perfect competitive market and monopoly are maximise the profit where MC=MR but the difference is that monopoly has charge the price above the MC and price are control by the firm.

Q3Ans---

Under perfect competition, the buyers and sellers cannot influence the market price by increasing or decreasing their purchases or output, respectively. The market price of products and output in perfect competition is determined by the industry. This implies that in perfect competition, the market price of products and output is determined by taking into account two market forces, namely market demand and market supply.

The goal of a monopolist is also profit maximization. Where the price of output will be charge higher and by lowering the price. Thus the price and the output is determine in the monopoly markets where MC curves intersect the MR curves.

Q4Ans====

Product differentiation, price discrimination, and cartel formations, are under the oligopoly and monopolistic market. Since in the oligopoly and monopolistic market the firm are the price maker and the buyers are the price takers. The firm will charge the higher price with differentiation on productions. On the other hand, in the oligopoly market there is a rise in price discrimination because every set of goals in this market is to profit maximisations.

Q5Ans---

If the government will impose the tariffs or customs duties on the goods that imported from other country, this will be shortage in the stock of goods and the monopoly markets will start to charge a higher price to cover the tax that they have paid and that amount will impose on the consumer by increasing the price. On the other hand for the perfect market it will increase the price but it will be beneficial and uniformly to all the products. But in real world it is rare to find such perfect market.

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