Economics: Perfect and Monopolistic Competition, Free Trade Agreements, Technology and Labour Market

Running head: ECONOMICS
Economics
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1ECONOMICS
Table of Contents
Answer to Question 1:.....................................................................................................................2
Answer to Question 2:.....................................................................................................................3
Answer to Question 3:.....................................................................................................................4
References:......................................................................................................................................6

2ECONOMICS
Answer to Question 1:
The two market structures that have been considered include perfect competition and
monopolistic competition and they are described briefly as follows:
Perfect competition:
In this type of market, there are numerous sellers and purchasers where the sellers are
price takers selling homogenous goods and both parties have sound knowledge of the products
(Tyers, 2015). For example, KFC and McDonalds in Australia are food suppliers that sell
homogeneous products, which provide the purchasers to switch over from one company to
another. Moreover, since the sellers constitute of small portions of market share, their influence
on price is minimal and thus, they are price-takers. Moreover, all the customers have sound
knowledge of product prices and the workers have full details of wages, which prove that all the
participants have perfect knowledge.
Monopolistic competition:
In monopolistic competition, there are many firms having differentiated products with
close substitutes; however, there is no price competition. For instance, Toyota, Iveco Australia,
HSV and others fall in this market, in which there are various sellers and buyers ((Cato &
Matsumura, 2015). All the organisations manufacture cars; however, their characteristics are
different. Despite the differentiation of products, they are close substitutes. Due to this
differentiation, various organisations attempt to make up the differences by using special
discounts or advertising for raising their demand. Hence, no price competition exists among the
firms.