Market Types
3.1 Explain how market structure in the case above determine the pricing and output decisions of business
3.1.1 Market types
• Perfect competition: - maybe called pure competition in which there are a lot of people and the same other conditions. On the other hand, people cannot affect to the price and everything is equal. (BPP 2010, page 246)
¬- There are 5 criteria perfect competition has to meet:
1. All firms sell an identical product.
2. All firms are price takers.
3. All firms have a relatively small market share.
4. Buyers know the nature of the product being sold and the prices charged by each firm.
5. The industry is characterized by freedom of entry and exit. (Investopia)
• Monopoly: a kind of product or service is owned by company, which provide this product or service. Of course, company does not have any competitor in the market. It can make price higher, quality lower and customers will be harmed the most. (Investopia)
• Monopolistic competition: is a common market that there are many companies compete each other but their products are not identical. Monopolistic competition was identified firstly by Edward Chamberlin and Joan Robinson in 1930. (Economiconline)
• Oligopoly: is the market in which there are some companies, their business affects companies remaining. (BPP 2010, page 249)
• Duopoly: is the market in which there are two sellers who compete with each other with identical goods. Other companies’ output is seen to be fixed. This case stays between monopoly and competition. (BPP 2010, page
3.1.1 Market types
• Perfect competition: - maybe called pure competition in which there are a lot of people and the same other conditions. On the other hand, people cannot affect to the price and everything is equal. (BPP 2010, page 246)
¬- There are 5 criteria perfect competition has to meet:
1. All firms sell an identical product.
2. All firms are price takers.
3. All firms have a relatively small market share.
4. Buyers know the nature of the product being sold and the prices charged by each firm.
5. The industry is characterized by freedom of entry and exit. (Investopia)
• Monopoly: a kind of product or service is owned by company, which provide this product or service. Of course, company does not have any competitor in the market. It can make price higher, quality lower and customers will be harmed the most. (Investopia)
• Monopolistic competition: is a common market that there are many companies compete each other but their products are not identical. Monopolistic competition was identified firstly by Edward Chamberlin and Joan Robinson in 1930. (Economiconline)
• Oligopoly: is the market in which there are some companies, their business affects companies remaining. (BPP 2010, page 249)
• Duopoly: is the market in which there are two sellers who compete with each other with identical goods. Other companies’ output is seen to be fixed. This case stays between monopoly and competition. (BPP 2010, page