KUALA LUMPUR INFRASTRUCTURE UNIVERSITY COLLEGE
FOUNDATION IN BUSINESS
BUSINESS STUDIES (FBM 101)
Individual Assignment
Lecturer Name : : Hazelena Dewi Bt Fatahul Ariffin Zulfadli Azim Bin Mohd Za’ba KI091371
Matric no :
Pure competition Monopolistic competition Oligopoly Monopoly
Pure competition
A market structure in which a very large number of firms sell a standardized product into which entry is very easy in which the individual seller has no control over the product price. There is no non-price competition, a market characterized by a very large numbers of buyers and sellers.
Example :
Agricultural products such as potatoes and wheat.
Advantage o there is freedom to enter & exit the market o information is freely available Disadvantage o a large number of firms o slow market growth o industry shake out o low switching costs o firms to have a small share of the market
Monopolistic competition
A market structure in which many firm sell a differentiated product into which entry is relatively easy in which the firm has some control over its product price and in which there is considerable non-price competition
Example :
Gas station, grocery stores and restaurants.
Advantage o Has a perfectly elastic demand o Firm has some control over price o Relatively free entry and exit o Many buyers and sellers Disadvantage o Standardized product o Non-price competition
Oligopoly
A market structure in which a few firms sell either a standardized of differentiated product into which entry is difficult in which the firm has limited control over the product price and also non-price competition.
Example :
Banking industry, beer companies and pharmacy.
Advantage o Price stability within the market o Products could be highly differentiated Disadvantage o High barriers to entry o Many firm may make up the price
Monopoly
A market structure in which one firm sells a unique product into which entry is blocked in. The single firm has considerable control over the product price and in which non-price competition may or may not be found.
Example :
Public utilities such as gas, electric and water.
Advantage o May be appropriate if natural monopoly o Encourage R&D o Encourage innovation o Economics of scale can be gain(consumer may benefit) Disadvantage o Potential for inefficiency o Potential for supply to be limited(less choice) o Exploitation of consumer(higher price) o Causes a reduction satisfaction of the customers.