Business Enviroment

656 Words3 Pages
Market structures
In this part of the report I will explain the different type of market structures I will give advantages and disadvantages for all and how they have direct relationship with pricing and output decisions.
A monopoly in the market structure controls the industry; it is the one and only business in that industry. The entry barriers are very high a somewhat impossible to get in and out of, they have no competition so can set quite high prices depending on the demand for the product and set government regulations. Advantages for Monopoly is the business can make huge profit but as this would be an advantage for the business this would also be a disadvantage as they have control over pricing they will set high
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With easy entry and exit of the market there are a lot of businesses selling the same product or service at the same prices, businesses in perfect competition are price takers they have little control over the prices of their product as there are so many small businesses in perfect competition none has control over the industry. Disadvantages for perfect competition in the market is no businesses will have an upper hand on their competition with a lack of product to choose from they are all selling the same product at the same price. An advantage for perfect competition is that the business will know when the consumer’s demands change from which they can respond to their wishes.
Monopolistic competition
Monopolistic competition in the market structure has many businesses selling similar but none identical products with free entry into the industry businesses are competing against each other. The businesses in this industry have some control over the prices they charge but with none of the company’s being big enough to make a difference to the prices over the whole industry. Businesses must find themselves quickly in the market to know if they are going to profit or loose from their investment. Advantages for monopolistic competition in the market are with no entry barriers disadvantages for monopolistic competition it because they have some power over the market they can rise or lower their prices.
Market structure has a direct relationship with
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