Explain - Pure monopoly, Oligopoly, Monopolistic competition, Pure Competition.a.) Pure monopoly
Monopoly is a market situation in which there is only one seller of a product with barriers to entry of others. The product has no close substitutes. He is a price maker who can set the price to his maximum advantage. This may occur because the firm has a patent on a product or a license from the government to be a monopoly .Pure monopoly occurs when the producer is so powerful that he is always able to take the whole of all consumers’ income whatever the level of his output is.
Oligopoly is a market situation in which there are a few firms selling homogeneous or differentiated products. It is difficult to pinpoint the number of firms in the oligopolist market. There may be three or five firms. It is also known as competition among the few. With only a few firms in the market the action of one firm is likely to affect the others. An oligopoly industry may produce either homogenous or heterogeneous products.
c.) Monopolistic competition
Monopolistic competition refers to a market situation where there are many firms selling a differentiated product. There is competition which is keen, though not perfect, among many firms making very similar products. No firm can have any perceptible influence on the price output policies of the other sellers nor can it be influenced much by their actions. Thus monopolistic competition refers to competition among a large number of sellers producing close but not perfect substitutes for each other.
d.) Pure Competition
In pure competition the number of buyers and sellers is very large. There is a perfect competition among them. Price is determined for the entire industry by the forces of demand and supply. All firms have to sell their product at that price. No firm can influence price by a single action. Thus every firm is a price taker and a quality adjuster.