Microeconomics Essay Example | Topics and Well Written Essays - 2000 words - 4

Microeconomics - Essay ExampleOne of the main qualitys of spotless competition includes sale of homogenous goods where all firms in the merchandise same the same good. The sustain characteristic of perfect competitive market is perfect information where all sellers and buyers if goods know the cost of the good and an add in price by the seller will result in zero sales.Monopoly is a market structure consisting of ace seller and many buyers hence, the seller has total maker power on price and quantity. The main characteristic of this market is the lack of close substitutes hence, the users have to purchase from the firm at the price. The second characteristic of monopoly is high barriers of entry that could be as a result of high capital requirement, self-possession of production resources by the firm, natural causes, and government offer of single license to the firm ensuring presence of anomalous profits in the long-run in a monopoly market.Oligopoly defines a market struct ure characterized by few large firms operating in the market hence the decision of a firm affects other firms in the market. A characteristic of an oligopoly is aggressive and defensive advertising to ensure buyers get information on the products and grant a firm advantage over the other firms in the market. The other characteristic is price rigidity, since when one firm increase price other firms may not follow suit leading to dismission of sales by the firm with an increased prices and augmented sales for the other firms.Monopolistic competition consists of a market structure consisting of firms with a degree of market power owing to the production of non-perfectly substitutable goods, and the start out of the firms is profit maximization. A characteristic of monopolistic competition is free entry of firms ensuring the economic profits in the long-run are reduced to normal profits. The second characteristic is that firms produce differentiated products allowing for a sealed de gree of market power since the goods cannot be