ECONOMICS
COMPETITION AND MARKET STRUCTURES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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marginal analysis
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identical products
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freedom of entry and exit
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very large number of buyers and sellers
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Detailed explanation-1: -Which condition is present in pure competition but missing in monopolistic competition? the government does not try to eliminate all monopolies.
Detailed explanation-2: -Firms in a perfectly competitive market are all price takers because no one firm has enough market control. Unlike a monopolistic market, firms in a perfectly competitive market have a small market share. Barriers to entry are relatively low, and firms can enter and exit the market easily.
Detailed explanation-3: -In monopolistic competition, we still have many sellers (as we had under perfect competition). Now, however, they don’t sell identical products. Instead, they sell differentiated products-products that differ somewhat, or are perceived to differ, even though they serve a similar purpose.
Detailed explanation-4: -MONOPOLISTIC COMPETITION-is the market structure that has all the conditions of a perfect competition EXCEPT for identical products.
Detailed explanation-5: -In economic theory, perfect competition occurs when all companies sell identical products, market share does not influence price, companies are able to enter or exit without barriers, buyers have perfect or full information, and companies cannot determine prices.