Economics for Business

Economics for business

Economics
Answer 1
a. The number of firms in a particular market structure is different from one another. In the case
of perfect competition and monopolistic competition, there are large numbers of independent
sellers whereas in an oligopoly market structure there are only a few numbers of independent
sellers. There is only one independent seller in case of a Monopoly market structure that has a
great influence on the market (Hunt, 2010).
b. There is a product differentiation for each market structure. In perfect competition, the
products that are sold are homogeneous whereas the product sold by a monopolistic competition
is close substitutes. A homogeneous product is nature is said to be the one that can be
distinguished from the competing supplier’s products. These products can be easily substituted
for another because they have the same physical characteristics and also the quality of these
products is similar to one another. The product sold by oligopoly may be either homogeneous or
close substitute. Monopoly is engaged in selling products that are a limited and remote substitute
(Hunt, 2010).
c. There is a very low barrier to entry in perfect competition or monopolistic competition market
structure. So, the entry in this type of market structure is quite easy and free. New players can
entry and exit the market. However, it is difficult for the new form to enter into an oligopoly
market as the entry is restricted. A Monopoly market structure has very high barriers to entry and
the new firms can't enter into the market (Hunt, 2010).
Answer 2.
(i) Aldi supermarket is a part of an oligopoly market structure because there are few
interdependent sellers and each can influence the market as a whole (Mrázova & Neary, 2013)
(ii) A tattoo parlor can be said to be an oligopoly market structure because the consumers are
very few and parlors are few. Each parlor can devise their own plan and play a dominant role in
increasing their reach (Mrázova & Neary, 2013)
(iii) Crown casino in Melbourne lies in an oligopoly market because there are only a few sellers
and each can plan their own strategy to grab the customers. Hence, no outlet is dependent on
each other.
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