Microeconomics

Running head: MICROECONOMICS
Microeconomics
Name of the Student
Name of the University
Course ID

1MICROECONOMICS
Table of Contents
Perfect Competition...................................................................................................................2
Article:....................................................................................................................................2
Author:...................................................................................................................................2
Source:....................................................................................................................................2
Date:.......................................................................................................................................2
Monopoly...................................................................................................................................4
Article:....................................................................................................................................4
Author:...................................................................................................................................4
Source:....................................................................................................................................4
Date:.......................................................................................................................................4
Monopolistic competition..........................................................................................................6
Article:....................................................................................................................................6
Author:...................................................................................................................................6
Source:....................................................................................................................................6
Date:.......................................................................................................................................6
Oligopoly....................................................................................................................................8
Article:....................................................................................................................................8
Author:...................................................................................................................................8
Source:....................................................................................................................................8
Date:.......................................................................................................................................8
References................................................................................................................................11

2MICROECONOMICS
Perfect Competition
Article:
“The Theory of Perfect Competition Is Wholly Misleading”
Author:
Donald J. Boudreaux
Source:
https://www.aier.org/article/theory-perfect-competition-wholly-misleading
Date:
November 27, 2018
Basic theme
As suggested from the title of the article, it discusses myth about existence of
perfectly competitive market in real world. It critically evaluates how real world competition
in different market differs from that of traditional notion of perfect competition.
Critical review
The Author states that if perception of neoclassical economist regarding perfect
competition are right then it can be observed that competitions in the market reaches at peak
only when it ends. Any economic activity that appears as competitive is actually
monopolistically competitive or imperfect competition from an economic perspective. For
example, if an automobile seller improves its mid-priced SUV or a motel chain advertise to
promote its guest room then a non-economist considers these activities as competition for
buyers. Neo-classical economists however evaluate the incident as existence of imperfect
competition instead of perfect competition as sellers compete in the market in terms of

3MICROECONOMICS
attributes other than price. Neo-classical economist believed that competition can be defined
only in terms of price. Any attempts of sellers to increases sales by strategy other than price
are considered as monopolistically competitive. In competitive market, the only decision left
to firm is related to volume of production. However, economists have long been asserted that
assumptions of perfectly competitive market fail to describe the reality (Boudreaux, 2018). In
real world, by competition a firm means to sustain operation in such a manner that it can
convince more and more buyers to purchase its product. Perfectly competitive market
assumes absence advertising and other efforts to promote the product (Bordalo, Gennaioli &
Shleifer, 2015). This contradicts the assumption of perfect knowledge to buyers, as buyers
can only be fully informed from advertising and other marketing strategy. In reference to the
unrealistic assumptions, the concept of perfectly competitive market should be rejected both
in terms of theoretical understanding and is ability to evaluate cases related to real world
markets.
Terminology
Perfect competition: This refers to a situation where large group of buyers and sellers
compete in the market and involve in exchange of a homogenous product at a prevailing
single price (Baumol & Blinder, 2015)
Imperfect competition: Imperfect competition indicates a market situation where some
features of monopoly market allow individual buyers or sellers to some degree of control
over the price.
Positive and Normative argument
Positive:
 According to the supposed experts, competition is at its zenith when zero of it exists.
 In a “perfectly competitive” market, sellers have no further need to cut prices.