ECONOMICS EXPLAINATION

Market Structure

 Is the interconnected characteristics of market, such as the number and relative strength of
buyers and sellers, degree of freedom in determining the price, level and forms of
competition, extent of product differentiation and ease of entry into and exit from the
market.

market structure are those characteristics of the market that significantly affect the behavior
and interaction of buyers and sellers

so para daw makapasok ka sa market ineencourage nila na yung I sesell momong product is
unique kasi pag yung product na isesel mo sa market is maraming katulad, hindi ka
masyadong tatangkilikin ng mga costumer. So pag di ka tinangkilik ni costumers dun ka na
mag eexit sa market

Perfect Competition

 The situation prevailing in a market in which buyers and sellers are so numerous and well
informed that all elements of monopoly are absent, and the market price of a commodity is
beyond the control of individual buyers and sellers.

Perfect Competition is a type of market structure where many firms sell similar products and
profits are virtually non-existent due to fierce competition.

So dito yung monopoly daw ay absent o walang monopoly which is yung walang substitute
product at yung mga product daw na yun is maraming katulad sa market. Meron kang direct
substitute para sa isang particular na product.

Example nito is yung mga identical product or yung homogenous product or similar
products. Example is cellphone madami sa marke, different brand pero same cellphone yung
itinitinda nila sa market

Short Analysis

 A perfectly competitive firm produces the profit-maximizing quantity of output that equates
marginal revenue and marginal cost. This production level can be identified using total
revenue and cost, marginal revenue and cost, or profit.

In the diagram above, the firm is making supernormal profits. The total cost to the firm is
in blue, and the profit is in the red. We can intuitively tell it makes a profit because its
average costs are lower than the average revenue. To calculate the cost, see where the
quantity hits the average cost line, and then draw a horizontal line to the Y-axis.
Whatever area is above the cost is the profit or the loss.

Since we assume that all individual firms are profit maximizers, we take MC = MR for
profit maximization. If a company is loss-making, the rule still applies, so the loss is
minimized. Similarly, the least Total Cost is taken to maximize profit or minimize loss.
 Long Run Analysis

 In the long run, a perfectly competitive firm adjusts plant size, or the quantity of capital, to
maximize long-run profit. In addition, the entry and exit of firms into and out of a perfectly
competitive market guarantees that each perfectly competitive firm earns nothing more or
less than a normal profit. As a perfectly competitive industry reacts to changes in demand, it
traces out positive, negative, or horizontal long-run supply curve due to increasing,
decreasing, or constant cost

Imperfect Market/Competition

 Imperfect competition is a competitive market situation where there are many sellers, but
they are selling heterogeneous (dissimilar) goods as opposed to the perfect competitive
market scenario. As the name suggests, competitive markets that are imperfect in nature.

Imperfect competition is a competitive market environment where there are many

vendors. But in comparison to the perfect competitive market scenario, they sell
heterogeneous (dissimilar) products in competitive markets which are, as the name
suggests, imperfect.

Example is si Samsung nag titinda ng mga tv tas si apple is yung mcbool or laptop tas si
oppo is mga cellphone so ayun yung imperfect market kasi iba iba yung binebenta nilang
product sa market.

Isa pang example is yung mercury drug diba yun ay bilihan ng mga gamot so dun nag
bebenta sila ng mga different medicine like medicine sa ubo medicine sa mga allergy at
kung ano ano pa.

Types of Imperfect Markets

• Monopoly (only one seller)

This is a structure in which there is only one (dominant) seller. Products offered by this entity have
no substitutes. These markets have high barriers to entry and a single seller who sets the prices on
goods and services. Prices can change without notice to consumers.

• Oligopoly (few sellers of goods)

This structure has many buyers but few sellers. These few players in the market may bar others from
entering. They may set prices together or, in the case of a cartel, only one takes the lead to
determine the price for goods and services while the others follow.

• Monopolistic competition (many sellers with highly differentiated product)

In monopolistic competition, there are many sellers who offer similar products that can't be
substituted. Businesses compete with one another and are price makers, but their individual
decisions do not affect the other.

• Monopsony and Oligopsony

These structures have many sellers, but few buyers. In both cases, the buyer is the one who
manipulates market prices by playing firms against one another.