Answer to Question #316353 in Microeconomics for makgorometsa

Question

2.2 Market structures are referred as the competitive environment in which the buyers and sellers of the product operate. A market consists of all the actual and potential buyers and sellers of a particular product. Discuss thoroughly oligopolistic and perfect competitive market structure and give examples of each form of the market structure.

Answer 1

Answer.

Oligopoly refers to a structure of a market which consist of small units of businesses that doesn't keep others from having influence that is significant. A lot of concentration in oligopoly rests in market share of firms that are large.

The following are some of the characteristics of oligopoly market structure.

- They have very few sellers who control the sales in the industry.

-There is the aspect is interdependence within oligopoly .Firms and businesses function on their own without lot of help from others.

- Persistent advertising is another feature of oligopoly. Adverts are made to create awareness of the products and services being offered to the potential clients. Most of the time the adverts are done repeatedly.

- Oligopoly is characterized with the barrier to entry.It has been proven difficult to enter into oligopoly market and compete as an upcoming Enterprise.

Examples of oligopoly market structure include commercial air travel and auto industry.

On the other hand, perfect competitive market structure entails consumers and producers having symmetric and full information with no transaction costs attached to it.It allows a large number of producers and consumers to compete in this kind of market structure.

The characteristics of perfect competitive market structure include.

-There is freedom for a business or company to make a similar product.

- Its characterized by many buyers and sellers in the market.

- The business market does not have Transaction costs related to it.

- There are no barriers for the entry and exit into the market.

- Buyers have access to perfect information on the products they want.

An example of a competitive market structure is foreign exchange businesses and agricultural markets.