Compare and Contrast Oligopoly, Monopoly and Perfect Competition – Economics Assignment Help

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Compare and contrast oligopoly, monopoly and perfect competition market structures regarding the allocation of resources.

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a) Briefly compare and contrast oligopoly, monopoly and perfect competition market structures regarding the allocation of resources. 
Identify the key factors that distinguish four market structures and explain the differences in market outcomes (i.e. price and quantity) among these market structures.
Market structure is a term used in economics to describe how different industries are categorized and separated based on the degree and form of rivalry for products and services.It is founded on the qualities that influence the behavior and outcomes of businesses in a particular market. The number of buyers and sellers, the ability to negotiate, the degree of concentration, the degree of product differentiation, and the ease or difficulty of entering and exiting the market are just a few of the elements that define market structure.Perfect competition, oligopoly market, monopoly market, and monopolistic competition are the four most common market arrangements.

In an oligopoly, a small number of vendors supply a significant part of the market’s items.
They have some pricing control, but because their products are so similar when one cuts prices, the others follow suit.Because of the competition, prices in this market are modest.When one firm sets a price, others will follow that example in order to stay competitive.When one company, for example, lowers its prices, other companies usually follow suit.In an oligopoly, prices are levels of alt than they would be in perfect competition.As there is no dominant player in the industry, firms may be tempted to collaborate rather than compete, restricting entrants from joining the market.They function as if they were a small firm as a result of their collaboration.

In markets where one business is the only or dominating power offering a product or service, a monopoly exists.
This gives the business enough clout to keep competitors out of the market.Expensive hurdles to entry, such as technology, high capital demands, government regulation, patents, or high distribution costs, could be to respond. When a monopoly is established, the vendor may be able to charge excessive prices due to a lack of competition.
Monopolies set prices.This implies they set the price at which their products are offered for sale.Prices are subject to change at any time.A monopoly also limits the number of options open to buyers.When there is no other viable alternative, the monopoly becomes a pure monopoly.

Perfect competition is a market structure in which several firms offer identical products and profits are almost non-existent due to intense rivalry.With that said, it’s vital to remember that ideal competition is a theoretical concept that’s used to compare real-world markets.Although perfect competition is predicated on a number of assumptions that are rarely met in reality, there are a few situations that come close.With that stated, ideal markets have a number of key traits that separate them from other types of markets.

The key factors that distinguish and differentiate  four market structures :

The key factors that distinguish and differentiate  four market structures

b) Choose an oligopoly industry from your home country that was affected by the current pandemic.  Using real data from your case study identify its key characteristics in relation to the factors used to differentiate among the market structures.   

Describe your case study in sufficient details. Use features of each market structure such as number of sellers, type of product, entry conditions, profits and losses in the short and long run, advertising, research and development and appropriate diagrams to answer this question.
There are no indigenous automobile manufacturing companies in Nepal.The majority of automobiles are made by Japanese manufacturers.As a result, the country is significantly reliant on automobile imports.The two-wheeler market is gaining ground on the four-wheeler and heavy vehicle markets.  the virus, which has infected nearly every country on the planet, has had an impact on every country’s economy. The Covid-19 outbreak threw the world’s economies into chaos. International trade has shrunk dramatically.In March 2020, Nepalese lockdown tactics prompted numerous industries to shut down or function at a quarter of their typical capacity.International trade costs have risen as a result of travel restrictions and tighter border inspections.Nepal’s economy has been hindered, stalled, and even stopped as a result of the restrictive measures taken during the first wave.

While the automotive sector recovered considerably after the initial lockdowns and as the economies reopened, it has been severely harmed the automotive industry contributes significantly to economic growth and employment in many nations, including Nepal.Due to the pandemic, the semiconductor industry re-allocated resources.Automobile manufacturers had little choice but to drastically reduce their manufacturing capacity as a result of the pandemic, which resulted in a drop in demand for car suppliers.Meanwhile, as a result of the epidemic, home offices and online classes for students have grown in popularity, while the automobile market has dropped.
Automobile production capacity accounted for only 12% of worldwide chip production capacity in 2019, according to statistics.

The order economy is represented by the automobile industry.The epidemic has also affected the industrial chain normalcy of the long-term tight supply and demand equilibrium between upstream chip producers and downstream vehicle manufacturers.There was a significant reduction in all economic data following the closure of restaurants, shops, and, as a result, manufacturing enterprises.Industrial output dropped by 20-30%, retail sales by 40%, and restaurant and hotel revenue by 80%.The graph below depicts the added value of individual sectors of the national economy, as well as which sectors will be the most affected.

Added-value of individual sectors of the national economy

Figure 1.  Added-value of individual sectors of the national economy
According to the above, the manufacturing industry accounts for about 25% of total value contributed, followed by wholesale, retail, transportation, catering, art, and recreation, which account for around 19% of total value-added.Of course, the suspension of activity in this sector will have an impact on other areas of the economy.

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