Name: Carrington Muzanenhamo

Reg number: R234414H-

Test 1

Question: Outline the charecterristics of perfect competion, monopoly, monopolistic and

oligopoly under the following headings

1. Goal of the Firm

2. Entery and exit barriers
3. Number of players
4. Nature of products and
5. Whether the firm is price taker or price maker.
Market structurs, in economics these are the systems on how diffrent industries are classfied and
differentiated based on thier degree and nature of competition for goods and services. It is based
on the charectieristics that influence the behavior and outcomes of comapnies working in a
specific market. Here in this discussion we are looking at four market structures which are
common in business envoronment. This is focusing on major aspects of barriers to entry and ext,
nature of products, number of players, price making processes and major goals..

To begin with, major goal of all frims from monopoly, ologopoly, monopolistic as well as
perfect competative firms they all aim to maximise profit, Perfectly competative industry
dominated by many buyers and sellers with firms in that industry having a goal of profit
maximization. For example Mbare Musika where there a lot of buyers with many buyers from
diffrent parts of the society. The major goal for doing business is profit maximization, they get
more profit by playing with consumer behavior that is concpet of demand and supply. The same
applies to monopolistc competition where companies focus on profit maximisation, for example
supermarkets they aim to make more profit by reducing costs of production as well as charging
higher price. Monopoly and oligopoly they all target to get more profit using diffrent systems
and stratgies to maximise profit.

In perfectly competative and monopolistic competition industry they are many buyers and
sellers. For example vendors under perfectly competetive industry they operate under many
buyers and selllers. Monopolistic firms operates with many buyers and sellers as well. Under
monopolistic market there is also many buyers and sellers as evidenced by how supermarkets,
sport betting shops operates.

There one seller under monopoly with many buyers. In this type of market structre there is no
competition for example looking at how coampanies like ZESA, Dendera music operates where
they have rights to operate their respective business alone. There is also oligopoly where there
are few sellers for example the way baking companies like bakers inn, Lobels and Proton. They
provide unique products in thier own way but they are few sellers. This is also witnessed in life
assurance companies like Nyaradzo, Moonlight and Doves though some few companies are
getting into the business.

Under perfect competition products being sold are homogeneous in nature as opposed to
monopoly where products produced are unique in nature with no close subsitutes. In perfectly
competetive market products being sold are differantiated either by pricing, branding and they
way they are being produced. In ologopolistic market competitors produce products which are
either identical or differentieted depending on the nature of the industry.

In monopolistic, oligopoly and monopoly firms are price makers. It means firms have control
over the price. For example ZESA as a monopoly they set the price they wish to sell at. Under
ologopoly firms operates through cartel where they agree on whatever price to be used. This is
also realised through tobacco auction companies they operate through an organised cartel.
However, there is monopolistc competition where price is dertemined by free forces of demand
and supply. Where there is high demand of oranges on the market especially in summer price
tend to increase as there is lower supply to match. This is free from manipulation as there is
demand and supply concept.

In monoplistic and perfect competition, there is low and no barrier to entry and exit respectively.
In perfect competition anyone can enter or leave market the market without any limitation. For
example if new vendor need to sell tomatoes at any market there is no barrier in terms of costs
since it is cheaper. However, under monopolistic market they are lower barrier to entry and exit.
This is mainly because costs are bit higher as compared to perfect competition, for example costs
of constructing a the shop, costs of ordering products for resale are high for some individuals.

Under ologopoly and monopoly they are higher entry and exit barriers. For oligopoly it is mainly
because of high costs of operating as millions of money might be required. The patent right to
operate the business is also expensive making it difficult for any company or individual intrested
to invest in that industry. The governemnt might also have some intrests in that industry hence
they protect it from anyone to venture into that industry. The same applies in monopoly where
governement allow comapny to operate strategic business for the intrests of the citizens for
example the Air Zimbabwe.