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Essay type questions on market structure

That results in a state of limited competition.

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Bertrand Competition. By doing so, they can use their collective market power to drive up prices and earn more profit. The oligopolistic market structure builds on the following assumptions: 1 all firms maximize profits, 2 oligopolies can set prices, 3 there are barriers to entry and exit in the market, 4 products may be homogenous or differentiated, and 5 there is only a few firms that dominate the market. As a rule of thumb, we say that an oligopoly typically consists of about dominant firms. This market is dominated by three powerful companies: Microsoft, Sony, and Nintendo.

That leaves all of them with a significant amount of market power. A monopoly refers to a market structure where a single firm controls the entire market. The following assumptions are made when we talk about monopolies: 1 the monopolist maximizes profit, 2 it can set the price, 3 there are high barriers to entry and exit, 4 there is only one firm that dominates the entire market. Therefore, they are often regulated by the government.

Perfect competition describes a market structure, where a large number of small firms compete against each other with homogenous products. Meanwhile, monopolistic competition refers to a market structure, where a large number of small firms compete against each other with differentiated products. And last but not least, a monopoly refers to a market structure where a single firm controls the entire market.

Yes, monopolistic markets are an example of imperfect competition.

Indeed, as much as these are theoretical yardsticks, everything except for perfect competition is, by definition, imperfect competition. They are similar, but not quite the same. Imperfect competition describes all market structures that lie anywhere between perfect competition and a monopoly.

18 comments

So monopolistic competition and oligopolies are both considered different types of imperfect competition. This has been really helpful,it has helped me to understand the market conditions that falls on each market structures. Thank uou for the very insightful and educational article. Essentially you're trying to find the best fit to one of the theoretical economic market types.

Don't forget that, and don't ramble.

I have a very good extended essay that got an 34 out of 36 for a similar type of Essay, and I have read it about 5 times through now! Its great reading old essays.

Tell me if you'd like to see it, I'll give it to you somehow. I am doing a similar extended essay and i was actually thinking of doing it on just one firm but what you said does make sense You can post now and register later. If you have an account, sign in now to post with your account.

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Essay on Markets: Top 4 Essays | Economics

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