Forms of Market|what is Market ?|Features of Monopolistic competition
What is Market ?
It is arrangement that facilitates the sale and purchase of goods and services by bringing buyers and sellers in contact with each other.
Forms of Market
i) full competition
ii) Monopoly
iii) monopolistic competition
iv) Minorities
full competition
perfect competition is a form of market in which a large number of buyers and sellers buy and sell identical goods at prices set by the industry.
Full Competition features
i) Large number of sellers of firms: The number of sellers selling a commodity is so large that a decrease in the supply by any on firm has very little effect on the total market supply.
ii) More number of buyers: Not only the number of sellers is more ,the number of buyers is also much more.Accordingly ,unlike am individual firm,an individual buyer was not able to influence the price of a commodity. This reduction is growth in individual demand has very little impact on cool market demand.Therefore in perfect competition the individual buyer is also the price acceptor.
iii) Full Knowledge: Buyer and seller have complete knowledge of the prevailing price in the market.Buyers have full knowledge that at what price different sellers are selling the commodity,as a result of such knowledge and awareness,the same price of the commodity is found in the market.
iv) Free Entry and Exit of Firms: In the state of perfect completion,any firm can enter or leaves the industry from the past.Any kind of legal restrictions on the entry or exist of the firms.
Monopoly
It is a form of market in which there is only one seller of a commodity and he has complete control over the price of the commodity.
Features of Monopoly
i) One seller and number of Buyers:In a monopoly ,there is only one producer of a commodity.
○There is only one firm in a monopoly .But there are a large number of buyers of the commodity,as a result of this,no buyer can affect the price of the commodity.
ii) Restriction on entry of new firms: There are certain restriction on the entry of new firm in a monopoly industry.Patent rights are granted to a monopoly firm.or a monopolistic ultimate has control over any technology or new material required for production.
iii)Lack of close substitute: A monopoly firm produces a commodity which has no immediate substitute.
iv) Complete control over Price: The monopolist is the sole producer of the commodity in the market and the monopolist has complete control over the price of the commodity.Thus the monopolist is the price setter,that is,the one who decides the price.
Monopolistic competition
It is that form of market in which there are many buyers and sellers of a commodity but each seller's commodity is different from each other.so in this market there are many sellers of the commodity who sell differentiated goods.
Features of Monopolistic competition
i) Large number of buyers and sellers: In monopolistic competition the number of buyers and sellers in much large than in perfect competition.The size of each firm is also small.Each firm has only a limited share in the market.
ii) Cost of sales: Every firm has to do a lot on advertisement etc.to promote its product .The firm gives advertisement is newspapers,cinemas,radio,TV etc.to sell its goods in large quantity.
○The expenditure incurred on advertising and promotion is called sale
iii) Lack of Complete mobility:The factor of production lack complete mobility.Accordingly,different price prevail for the same factor or like article in the market.
Minorities
An minorities market is a market in which the number of buyers and less sellers is there,in this market the price of the commodity and the commodity is different.The advertising cost in this market is very high.And in this the buyers have incomplete knowledge of the value of the item.
Features of Minorities
i) Fewer sellers and more buyers: Under the minorities market there are less number of sellers and more number of buyers because expensive goods are traded in this market,this market is the market of the wealthy class.
ii) Price Differentiation:Under the minorities market the price of the commodity varies because he seller has complete control of the price of the commodity.
iii) Advertising Cost: The adverting cost of goods under minorities market is very high because in this market the seller spends more money on the advertisement of the goods as there is more competition in this market.
iv) Commodity Differentiation: Under the minorities market,the goods of each seller are different from other seller in some way or the other ,no seller can make his goods equal to other sellers.