Question

Answer the following questions on microeconomic concepts. The assignment requires you to engage in independent academic research. Your responses should include source citations and a reference list using the Harvard Referencing System. All sources used in the preparation of this assignment should be listed in your reference list. Please be aware that your answers will be checked for plagiarism using Turnitin. Your answers should be presented in your own words. Direct quotes should be
used sparingly and referenced appropriately. Please make sure to adequately paraphrase any sources used to pass the Turnitin evaluation.

Question 3 (1250-1500 words)
Evaluate the economic efficiency of different market structures and their effect on
consumers. To answer this question:
1. Explain market efficiency
2. Identify and distinguish between the different types of market structures;
compare and contrast the similarities and differences between their
characteristics.
3. For each market structure, provide an industry example and evaluate the
economic efficiency of each (market structure) and the effect of each (market
structure) on the industry’s consumers.

Answer 1

Question 3.

1. Market Efficiency: Market Efficiency is referred to as the extent to which the market prices provide all the relevant information. All the buyers and sellers have full information about the market so that they can avail various opportunities to do the transaction.

It is the measurement of the availability of all relevant data to all the participants of any particular market.

If market are efficient ,then all information is already incorporated into prices, and so there is no way to "beat" the market because there are no undervalued or overvalued securities available.

An efficient market is characterized by a perfect, complete ,costless and instant transmission of information.

2. Identify and distinguish between the different types of market structures, compare and contrast the similarities and differences between their characteristics.

Answer: Different types of market structures are as follows:

1.Perfect Competition:   It is a market structure in which there are many sellers and buyers , having homogeneous product and products are sell at uniform price .

2. Monopoly: There is only one seller, so a single firm will control the entire market. It can fix the prices of their choice as it has market power. There are no substitutes of goods available in it.

3.Monopolistic competition: There are large number of buyers and sellers , but they do not sell homogeneous products. The products are similar but seller sell slightly differentiated products.

4.Oligopoly: In oligopoly, there areonly few firms in the market. The firms in this case either compete with another to collaborate together. They use their market influence to set the prices.

-Similarities and Differences between their characteristics:

Basis of Differences	Perfect Competition	Monopoly	Monopolistic Competition	Oligopoly
1. Number of sellers and Buyers	Large	One seller, but large number of buyers.	large	Few sellers
2.Product	Homogeneous	Homogeneous or differentiated	Product differentiation	May or may not be any product differentiation.
3.Price	Uniform	Price discrimination	No uniform price because of product differentiation	Price is influenced by other firms.
4.Demand curve	Perfectly elastic	Relatively less elastic	Relatively more elastic	Kinked demand curve

Similarities between their Characteristics are as follws"

-Similarities between oligopoly and monopoly competition are "

-They both exhibits imperfect competition in that oligopolyn has few sellers and monopoly has many sellers.

-Firms have some control over prices in both market structures.

-Similarities Between perfect competition and Monopolistic Competition:

1.The number of firms is large in both markets.

2. In both ,firms compete with each other.

3. In both, there is a freedom of entry and exists.

4.Both markets earn super normal profits or incur losses in short- run.

Option 3.

Basically, in order to achieve market efficiency, two main criteria;s should be acheived-product efficiency and allocative. Specifically in the condition of perfect competition ,these two requiements can be acheived.For customers perfect competition is the most advantageous type of market, price is stable, all information regarding goods are available.

In comparison to perfect competition - monopoly cannot achieve neither productivity not allocative efficiency. Monopoly realizing the product with higher prices.