Compare and contrast any TWO types of market structures (perfect to imperfect/imperfect to imperfect) in detail in terms of the following. – Number of businesses – Nature of product – Entrance – Control over prices – Information – Examples – Demand curve – Economic profit/loss – Decision-making – Collusion – Productive/Technical efficiency – Allocative efficiency (Perfect Market and Imperfect Market)
‘’Market structures are classified under Perfect Competition, Monopolistic Competition, Oligopoly and Monopoly’’ Compare all FOUR market structures in a tabular form.
NB: Learners should write in full sentences even if the comparison is done in a tabular format). (Marks depend on the combination of market structures to be examined)
| Criteria | Perfect Competition | Monopolistic Competition | Oligopoly | Monopoly |
| Number of firms | So many that no firm can influence the market price | So many that each firm thinks others will not detect its actions | So few that each firm must consider the others’ actions and reactions | One seller and there is no competition. The seller is the price maker. |
| Nature of product | Homogeneous/i dentical in terms of the physical appearance | Heterogeneous /differentiated | Homogeneous or heterogeneous | Only one product with no close substitutes |
| Entry | Completely free/easy to enter. There are no barriers to enter | Free. There are no barriers to enter | Varies from free to restricted | Completely blocked by legal restrictions and cost advantages e.g. natural and artificial monopolies |
| Information | Complete | Incomplete | Incomplete | Complete/ Incomplete |
| Collusion | Impossible | Impossible | Possible | Unnecessary |
| Firm’s control over the price of the product | None. Prices are determined by demand and supply | Some | Considerable, but less that in monopoly | Considerable, but limited by goal of profit maximisation |
| Demand curve for the firm’s product | Horizontal (perfectly elastic) | Downward- sloping | Downward- sloping, may be kinked | Equals market demand curve: downward-sloping |
| Long run economic profit | Zero/normal profit | Zero/normal profit | Can be positive/econom ic profit | Can be positive/economi c profit |
PLEASE NOTE: THE ABOVE TABLE SHOULD BE VERBALLY WRITTEN AS PER ESSAY INSTRUCTION