FACTORS LEADING TO PROFIT MAXIMIZATION

Factors Minimal profit Medium profit High profit

Market Concentration Many sellers Few sellers One seller

Market Entry No Barriers to entry Some scale barriers Scale and Legal Barriers,
Gov’t Barriers
Product Differentiation Homogenous good Some degree of Product Highly differentiated
differentiation product
Information Perfect information for all Limited information Very Liited Information
participants
Market Power No market power Limited Market power High market power

Market Structure Perfect Competition Oligopoly and Monopoly

Monopolistic
Competition
 1. MARKET CONCENTRATION

This refers to the number of the sellers and

buyers in the market. The more
concentrated the market means the lesser
producers are there in the industry.
 2. MARKET ENTRY

MARKET BARRIERS- REFERS TO THE INHERENT

FEATURES OF THE INDUSTRY AND VARIOUS MEANS
DEVISED IN THE MARKET TO PREVENT THE ENRTY
OF POTENTIAL PLAYERS AND COMPETITORS THAT
WANT TO TAKE ADVANTAGE OF THE ENORMOUS
PROFIT IN INDUSTRY.
 3. PRODUCT DIFFERENTIATION

• This refers to the ability of business firm to create a market activity through
several means of varying its products and services. The ability of the business
enterprise to convince the buyers that the product or service it is selling is
different from similar products and services can give market power to the firm.