MODULE 2

• Monopolistic competition a market structure, where a large number of small firms compete against each other.
• monopoly a market structure where a single firm controls the entire market.
• "Market structures" refer to the different market characteristics that determine relations between sellers to each another, of sellers to buyers and more.
• Pure Competition a market structure is rare in the real world
• monopolistic competition sell similar but highly differentiated products.
• Producers freely enter the market when profits are attractive.
• Products may be homogenous or differentiated.
• pure monopoly exists when there's a single firm that controls the entire market. The firm and industry are synonymous.
• Perfect competition describes a market structure, where a large number of small firms compete against each other
• The idea of perfect competition builds on several assumptions:

  (1) all firms maximize profits

  (2) there is free entry and exit to the market,

  (3) all firms sell entirely identical (i.e., homogenous) goods,

  (4) there are no consumer preferences. By looking at those assumptions, it becomes obvious that we will hardly ever find perfect competition in reality.
• what are the competition among the many?

  perfect competition

  monopolistic competition
• what are the competition among the few?

  monopoly

  oligopoly