Discussion Question #2 -- (10 Points) You’ll want to provide a thoughtful, 100+
ID: 347806 • Letter: D
Question
Discussion Question #2 -- (10 Points)You’ll want to provide a thoughtful, 100+ word response for the discussion question that you select. Think of these as ‘essay questions’. In your response, clearly demonstrate an understanding of the concepts from the readings and lecture notes relating to the topics. Incorporate examples in your explanation that demonstrates your understanding the material.
1. What are the four degrees of competition, and what are some examples of each?
Competition within Free Markets B0 35 40 45 50 f T-Shirts Economists generally agree there are four different degrees of competition: (1) perfect competition, (2) monopolistic competition, (3) oligopoly, and (4) monopoly. Perfect competition exists when there are many sell- ers in a market and none is large enough to dictate the price of a product. Sell- ers' products appear to be identical, such as agricultural products like apples, corn, and potatoes. There are no true examples of perfect competition. Today, government price supports and drastic reductions in the number of farms make it hard to argue that even farming represents perfect competition.
Explanation / Answer
There are 4 degrees of competition
Example: vegetables and fruits. Vegetables and fruits are produced by many farmers and there is large buyer base for these products. Hence it can be called perfect competition but there are cases where government provide subsidy for these products hence this is not truly perfect competition.
2. Monopolistic competition: Monopolistic competition is an imperfect competition where there are large sellers who produce same product but differentiate each other by branding their product. Hence buyer perceive each product as different. Here seller decides the price based on his requirement
Example: The best example for this is fast food restaurants. They price their products keeping competition in mind rather than price incurred.
3. Oligopoly competition: It is a type of competition where there are few sellers who dominate the market. Here price of product pf different sellers tends to be same because the main differentiator in this market is product and not price. The sellers know that price decrease by one competitor results in price decrease by other, hence there is no use. Generally, these types of market have high entry barriers in the form of high investment.
Example : Automobile industry, here buyer buy product based on product and not on price.
4.Monopoly competition: it is type of competition were there is only one seller who control the entire market. Hence consumers have no choice to make and pay money as fixed by seller.
Example: Public sector companies who offer services like water, electric city etc. are example for this. Here there is no choice for customer and they must accept service offered by seller.