ECONOMICS
MARKET FAILURES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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perfect (pure) competition
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monopolistic competition
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oligopoly
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monopoly
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Detailed explanation-1: -The correct sequence of the market structure from most to least competitive is perfect competition, imperfect competition, oligopoly and pure monopoly.
Detailed explanation-2: -Perfect competition is a hypothetical market structure in which there are very many firms, each of which represents an infinitesimal share of the market. In a perfectly competitive market, if any firm is able to earn an economic profit, other firms will immediately enter the market, driving economic profit to zero.
Detailed explanation-3: -Under monopolistic competition, many sellers offer differentiated products-products that differ slightly but serve similar purposes. By making consumers aware of product differences, sellers exert some control over price.
Detailed explanation-4: -Pure Monopoly This firm is the sole producer of a product, and there are no close substitutes. Because there are no alternatives, the firm has the highest level of market power. Hence, monopolists often reduce output, increase prices and earn more profit. Entry or exit is blocked in a pure monopoly.
Detailed explanation-5: -Answer and Explanation: Perfect competition has the largest number of suppliers.