Activity 1: In your notebook, write the advantages and disadvantages of every market structure. Market Structure Advantage Disadvantage Monopoly Oligopoly Perfect Competition Monopolistic CompetitionActivity 3 In your notebook, write down at least 5 examples each of corporations having characteristics of monopoly and oligopoly. Monopoly OligopolyCharacteristics of the Different Market Structure A monopoly refers to a market | An oligopoly describes a structure where a single firm market structure that is controls the entire market. In dominated by only a small this scenario, the firm has the number of firms, that results in highest level of market power a state of limited competition. as consumers do not have The firms can either compete any alternatives. As a result, against each other or monopolies often reduce collaborate. By doing so, they output to increase prices and can use their collective earn more profit. market power to drive up prices and earn more profit. The following assumptions are The oligopolistic market made when we talk about structure builds on the monopolies: (1) the following assumptions: (1) all monopolist maximizes profit, firms maximize profits, (2) (2) it can set the price. (3) oligopolies can set prices, (3) there are high barriers to entry barriers to entry and exit exist and exit, (4) there is only one in the market, (4) products firm that dominates the entire may be homogenous or market. differentiated, and (5) only a few firms dominate the market. Perfect competition describes Monopolistic competition also a market structure, where a refers to a market structure. large number of small firms where a large number of small compete against each other. firms compete against each In this scenario, a single firm other. However, unlike in does not have any significant perfect competition, the firms market power. As a result, the in monopolistic competition industry as a whole produces sell similar but slightly the socially optimal level of differentiated products. That output, because none of the gives them a certain degree firms can influence market of market power, which allows prices. them to charge higher prices within a specific range. The idea of perfect competition builds on several Monopolistic competition assumptions: (1) all firms builds on the following maximize profits (2) there is assumptions: (1) all firms free entry and exit to the maximize profits (2) there is market, (3) all firms sell entirely free entry, and exit to the identical (i.e., homogenous) market, (3) firms sell goods, (4) there are no differentiated products (4) consumer preferences. consumers may prefer one product over the other. -Qulkonomics