4 Types Of Market Structures
What are the key features of the four types of Market Structures we have studied Explain in what respects do they differ. Where necessary provide examples to your answer.
The four types of market structures that we have studied are perfect competition, monopolistic competition, monopoly and oligopoly. These categories have been made to help people understand how businesses operate and how prices, outputs and profits are determined. The four market structure types are there mainly for the purposes of organization.
Perfect Competition:
Perfect competition is an ideal state of economic affairs which does not exists in any industry. A perfect competitive industry has multiple firms selling the exact same product. The number of firms is large so that no single firm can influence price and the products are so similar that the consumer has no reason to choose one for another. Two factors that are necessary in perfect competition are perfect knowledge and perfect mobility. Perfect knowledge is when everyone is aware of every economic opportunity. Perfect mobility is when there would be no barriers such as certain licenses and patents for a firm to pursue there goals and sell a product.
A perfect competitor has a horizontal demand curve that is
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