1 Define Oligopoly Monopolistic Competition 2 What are the 4

1. Define Oligopoly Monopolistic Competition

2. What are the 4 market structures, explain? Give an example of a company in each market structure.

3. Is monopolistic competition good for society? Can policy advisors improve market outcomes?

5. Why do companies advertise? What are the positives and negatives of advertising?

Solution

1. Monopolistic competition is an imperfect competition where many firms participate and produce differentiate but not perfectly substitute products. Firms are price maker under this market. One firm takes other firm\'s price as given and ignore how it\'s own price impact other firms in this market.

For example- Hotels or, restaurants business.

Oligopoly is a market structure where two or more large firms dominate the market. This type of market forms due to collusion and thereby reducing market competition and increasing price for consumers. In this market, firms sell either differentiated or homogeneous product.

For example - operating system market, where ios and google Android dominates the smartphone operating system and Apple and windows dominate the computer Operating system.