Question

According to your readings and articles, the most common of the three market structures is

Perfect competition

Oligopoly

Answer 1

Perfect competetion is a one of the primary , basic and common market structure among all three market structures .

Perfect competition describes a market structure, where a large number of small firms compete against each other. In this scenario, a single firm does not have any significant market power. As a result, the industry as a whole produces the socially optimal level of output, because none of the firms can influence market prices.

The idea of perfect competition builds on several assumptions: (1) all firms maximize profits (2) there is free entry and exit to the market, (3) all firms sell completely identical (i.e., homogenous) goods, (4) there are no consumer preferences.