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NAME:_________________________ SECTION : __________________

LMS ACTIVITY

(MARKET STRUCTURES)

DIRECTIONS: Complete the table below

Market Structure Perfect Imperfect competition


Competition
Oligopoly Monopoly Monopsony Monopolistic
Competition

No of sellers and Many/numerou Few sellers One seller One buyer Numerous
buyers s sellers and sellers and
buyers buyers

Product Homogeneous/ Some degree of Highly differentiated Similar but


Differentiation similar or product can be
undifferentiated differentiation product differentiated

Information Perfect Limited Very limited information


information information

Market Power No market Limited market High/enormous market Some degree


power power power of market
power

Profitability Minimal profit Medium profit High /huge profit

Market entry Free entry and Some scale With restrictions/Scale Free entry
exit barriers/Contest and legal barriers; Gov’t and exit
able market barriers

1. Why is decreasing the price of product in order to win buyers is not healthy for a seller in

a perfect competition?

He/she will have lesser profit since the cost of production has increased while his/her

selling price has declined.


2. What will be the effect of homogeneous product to buyers?

They could not develop brand loyalty to the product.

3. What would be the benefit of having a free entry and exit in the market?

One can easily put up a business if he/she feels that it is profitable and leave when it is

not.

4. Why is there a high profit both in monopoly and monopsony?

The single seller can set a lower output at a higher price to maximize profit while a single

buyer can set a higher output at a lower price.

5. Why is there a single seller in monopoly?

It needs a huge physical capital investment.

6. In oligopoly, products are homogeneous but can be differentiated? How can this be

done?

Through various means of advertising and packaging.