This document discusses market structure and defines the key types: perfect competition, monopoly, and monopolistic competition. Perfect competition has many small sellers and buyers, homogeneous products, free entry and exit, and transparent information. A monopoly has a single seller with a unique product and controls price and quantity. Monopolistic competition has multiple firms producing differentiated products facing downward sloping demand curves. The main differences are around the number of buyers and sellers, product homogeneity, and price uniformity across the types.
6. Pure (perfect) Competition
Many and small sellers, so that no one can affect the
market
Homogeneous product
Free entry to and exit from the industry
Transparent and free information
7. Curves in Perfect Competition
E
(Industry:– Price maker) (Firm:-Price takes)
8. Monopoly
1. A single seller: the firm and industry are
synonymous.
2. Unique product: no close substitutes for the firm’s
product.
3. The firm is the price maker: the firm has
considerable control over the price because it can
control the quantity supplied.
4. Entry or exit is blocked.
10. Monopolistic Competition
Multiple firms produce similar products
Firms face down sloping demand curves
Profit maximization occurs where MC=MR
In the limit, firms compete away economic
profits
12. Vital Difference
References Perfect
Competiton
Monopoly Monopolistic
Competition
Number of Seller
And Buyers
Large One seller, but large
number of buyers
Large
Product Homogeneous Homogeneous/
Differentiated
Product
Differentiation
Price Uniform Not uniform Not Uniform
Number of Seller
And Buyers
Large One seller, but large
number of buyers
Large