The Market Structures Of A Market Structure

962 WordsJul 24, 20164 Pages
In economics, there are four market structures that function in the worldwide market. Each of these market structures correlates with one another to create the demand and supply of the market. However, these market structures have some unique traits that no other theory can have alike. Therefore, a comparison and contrast is necessary to distinguish each of these theories from one another. These market structures of the economy are perfect competition, monopoly, monopolistic competition, and oligopoly. These market structures will reveal the difference and similarities that each one has. Firstly, the perfection competition is a market structure that has four assumptions that define what it is to be in this market. The four assumptions include the following it has many sellers and buyers, it produces and sells homogeneous products, it has easy access and exits, and it provides information for all firms in perfect competition. In perfect competition the firms are price takers which means these firms do not have a say in the price of their products. This implies that firm in perfect competition will always sell at equilibrium price and it is considered to be perfectly elastic. In the short-run versus the long-run, perfect competition are both equally the same. The reason it is equally the same is because the golden rule marginal revenue equal marginal cost applies to both. Thus, in the short-run price is equal to marginal revenue and marginal cost which maximize their profit.

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