markets

Perfect competition

• Lots of buyers and sellers, no buyer or seller is big enough to influence the marker

• Goods are harmogneous, identical

• Low barriers to entry and exit

• Firms are price takers

The marginal revenue and average revenue is equal to the price

The marginal cost = Marginal revenue

Monopolistic market

Characteristics of a Monopolistic competition market

• many buyers and sellers

• Slightly differentiated goods

• Firms are price makers

• Price elastic demand

• Low barriers to entry

• Good information

• Non - price competition

• Firms are profit maximisers

Oligopoly Market.

Characteristics

• Few firms dominate the market

• High concentration ratio, no more than seven firms with 70% of market share.

• Differentiated goods

• Firms are price makers

• High barriers to entry/exit

• Interdependence - firms don’t make decision on their own, they make their decisions based on the action or the reaction of rival firms.

• Price rigidity

• Non price competition.

• Profit maximisers not the sole objective.