Question

Which of the following is the correct order of market structure from most competitive to least?

Answer 1

Answer:

Perfect Competition, Monopolistic Competition, Oligopoly, Monopoly

Explanation:

In perfect competition, many sellers are competing to sell an identical product. The market has very many small suppliers. No single supplier dominates the market, meaning no seller has the power to influence the price. The market has very many buyers as well. Suppliers have the freedom to enter or exit the market with ease.

Monopolist competition has very many sellers selling similar but differentiated products. Due to the differentiated aspect, sellers can set the prices for their products. The market has very many buyers.

An oligopoly is where a  few big suppliers dominate the market. The oligopoly market may have other smaller suppliers whose market share is a small percentage. Oligopoly may stock or manufacture identical or differentiated products.

A monopoly is where a dominant supplier is selling a particular product without competition. Only one supplier is selling that type of product. An oligopoly can sell lifetime solutions through books.