Economics question

[habib123]

what are the differences between perfect and imperfect markets.what do we have to write in this question?.can anyone summarise all the points

 

[HighGrades]

This question is asking a candidate to outline the differences between the perfect market system, this includes only perfect competition, and the imperfect market systems, this includes all those market structures which have influences and externalities. The imperfect market system includes Monopoly, Oligopoly and Monopolistic structures.

Perfect competition:

• 1.allocatively efficient (Price = Marginal Cost)
  2.productively efficient ( production done at lowest average costs)
  3.no barriers to entry (many buyers, many sellers)
  4.perfect knowledge to consumers
  5.homogeneous commodities

Imperfect systems:

• 
  1.allocatively inefficient ( price > marginal cost)
  2.productively inefficient ( production at MC=MR)
  3.barriers to entry
  4.distinctive goods

Good Luck,

From,
High Grades
http://www.highgrades.weebly.com

 

[habib123]

thanks man.in imperfect market structures do we have to explain all the three imperfect markets that is oligopoly,monopolistic and monopoly?.or just give a general overview of what happens in an imperfect market system?

 

[HighGrades]

It is preferred that you first define the imperfect and perfect market structures. This would show the examiner that you have good grip over this topic.
Later, in the main essay answer give a general view of the imperfections without mentioning the mono,oligo and monopolistic again and again. otherwise your answer would get wordy and redundant.

Good Luck,

From,
High Grades,
www.highgrades.weebly.com