First an economist will define perfect competition as a theoretical market form

First an economist will define perfect competition as

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First, an economist will define perfect competition as a theoretical market form of such a nature that no individual participants (buyers or sellers) in the economic process can have any influence on the market price (Viljeon, 2007). For perfect competition, market price is determined by the interaction between demand and supply and all the participants must accept the market price. In this case, all the market are price takers where they need to accept the price given and can only decide what quantities they will offer or request at that price. There are a few characteristics of perfect competition that firms need to considers as a businessman. According to Pathan (2017), market structure of perfect competition where all goods are homogeneous and no difference to the buyers from whom or where they buy the products. In perfect competition, all the buyers and sellers have complete knowledge of all market conditions. For example, of one firm increase its price above the market price, buyers can decide buy from those firms that still ask for a lower price. Vaidya’s (2019) have mentioned that this market structure is freedom to entry and exits the market. This is because there are no constraints on entry in the form of legal, financial, technological or other obstacles that restrict the freedom of movement of buyers and seller. There is some world example that related to perfect competition market structure such as foreign exchange market. Billions of dollars change hands every second so it is possible to make profit by buying currencies when they are cheap and selling them when expensive. For example, $1 buys 0.76 Euros or 7.04 Yuan, but 0.76 Euros only buy 7.78 Yuan. So, you could buy yuan with dollars, then buy euros with yuan, then buy dollars with euros and make a profit. Gold also known as one of the perfect competition market’s good to sell. This is because the price is very expensive due to many competitors selling gold and all trying to undercut each other’s price (Pettinger, 2019). While, monopoly is a market structure which combines elements of monopoly and competitive market. Monopoly is a single seller of a product and own its 100% of market share. Monopoly is a one seller of a particular product with no close substitute where the industry BEM1904233 / 896911 Page 7 of 12
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4602TECYPC THE GLOBAL MARKETPLACE controlled by monopolist (Brown, 2014). There are barriers to entry and exit the market to prevent competition due to large number of markets compete. According to Brown (2014), there are four types of monopoly such as natural monopoly which is market situation where the costs of production are minimized by having a single firm produce the product, geographic monopoly is based on absence of other sellers in certain geographic area, technological monopoly is based on ownership or control of a manufacturing method, process or other scientific advance (patent and copyright) and government monopoly where the market owned and operated by government such as military, water and sewage.
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