MASTER EXECUTIVE BUSINESS ADMINISTRATION

Group: Dr. Shahril

Subject: ECONOMICS

Class: 07 Jan 2024

Assignment: Individuals
Name : Zainah binti Mohamad Noor
Matrix no : EX2311111

Question 1 :

• Explain perfect competition and imperfect competition from an economics

point of view.

Answer :

Perfect competition is a market structure characterized by many buyers and sellers,

homogeneous products, perfect information, and ease of entry and exit, while
imperfect competition includes market structures with fewer sellers, differentiated
products, barriers to entry, and varying degrees of market power.

Difference Between Perfect and Imperfect Competition

Perfect competition is a market structure where many buyers and sellers exist, with
homogeneous products and no market power.

Imperfect competition refers to market structures with fewer competitors,

differentiated products, and the ability to influence market prices.

Criteria Perfect Competition Imperfect Competition

Number of Firms A large number of firms in the market Fewer firms in the
market
Market Power No individual firm has market power; each firm is a price taker
Individual firms have some degree of market power and can influence prices
Product Differentiation Products are homogenous, identical, and indistinguishable
Products may have differentiated features or branding
Entry and Exit Barriers Low barriers to entry and exit, allowing new firms to enter
and existing firms to exit freely Barriers to entry and exit may exist, limiting
the ability of new firms to enter or existing firms to exit the market
Information Transparency Perfect information is available to all market
participants Information may be incomplete or asymmetrical, with varying
levels of transparency
Price Determination Prices are determined by market forces of supply and demand
Prices can be influenced by individual firms based on their market power
Market Concentration Market is highly fragmented, with no dominant firms Market
can be concentrated, with a few dominant firms
Advertising and Marketing Limited advertising and marketing activities as
products are undifferentiated Advertising and marketing play a more significant
role to differentiate products and attract customers
Profit Maximization Firms aim to maximize profits in the long run by producing
at the minimum efficient scale Firms seek to maximize profits within the
constraints of market power and demand conditions
Output Flexibility Firms are flexible in adjusting output levels based on
market conditions Firms may have more limited flexibility in adjusting output due
to market power
Price Elasticity of Demand Demand for individual firm's product is perfectly
elastic Demand for individual firm's product may be elastic or inelastic,
depending on product differentiation and substitutes
Market Efficiency Perfect competition tends to lead to allocative and productive
efficiency Imperfect competition can result in less efficient allocation of
resources
Collusion Collusion among firms is not possible due to the large number of firms
and price transparency Collusion or cooperative behavior among firms is more
feasible, leading to potential antitrust concerns
Government Regulation Limited government intervention as the market is assumed to
self-regulate Government may intervene to promote competition or regulate
market behavior
Examples Agricultural markets, stock exchanges Automobile industry, soft
drink industry
Definition of Perfect Competition

Perfect competition is a market structure characterized by a large number of buyers

and sellers, homogeneous products, perfect information, free entry and exit, and no
individual firm having control over the market price. It represents an idealised
market scenario that rarely exists in the real world but serves as a benchmark for
economic analysis.

Question 1 :

Explain what is monopoly, duopoly, oligopoly and monopolistic.

A monopoly market is where there are one seller and a large number of buyers.

A duopoly market is where there are two sellers and a large number of buyers are
known as.

An oligopoly market is where there are few sellers and a large number of buyers.

Market Structure: Monopolistic Competition, Duopoly, Oligopoly

Market morphology is the term that’s used for different types of markets.

A monopoly market is where there are one seller and a large number of buyers.

A duopoly market is where there are two sellers and a large number of buyers are
known as.

An oligopoly market is where there are few sellers and a large number of buyers.

A bilateral monopoly is where there are a single buyer and one seller in the
market.

Question 2:
● Build a demand n supply curve in one axis based on the data below:

Qd Price (RM) Qs
250 100 5
200 200 75
150 300 150
100 400 225
50 500 300
5 600 375
d
Q_d
Q
d

(Quantity demanded) on the y-axis and Price(RM)

Price (RM)
Price(RM) on the x-axis:
• Plot the points (100, 250), (200, 200), (300, 150), (400, 100), (500,
50), (600, 5) for the demand curve.
• Plot the points (100, 5), (200, 75), (300, 150), (400, 225), (500,
300), (600, 375) for the supply curve.
Connect these points to form the demand and supply curves. The point where these
curves intersect represents the equilibrium price and quantity in the market.
• Q

• • =Q

• • =150, the price is RM300RM 300RM300.

So, the equilibrium in the market is
R
M
300
RM 300
RM300 for the price and
150
150
150 for the quantity.


You
Baded on new changes of technology the quantity of supply has changed as below

QS PRICE (RM
10 100
90 200
175 300
225 400
330. 500
400 600

Find a new equilibrium (price and quantity) based PV changes of technology

• At Qd=Qs=175Q_d = Q_s = 175Q

• d •
•
• • =Q

• • =175, the price is RM300RM 300RM300.

So, the new equilibrium in the market is
R
M
300
RM 300
RM300 for the price and
175
175
175 for the quantity, considering the changes in technology.