1. Explain the unique characteristics of the four primary market structures.
Before one can explain unique characteristics involving the four primary structures they must take into account as to what that actually means. In order to justify what they are one must first know the definition as to what a market structure is and how it effects the industry. Take for instance the definition of industry is when a firm basically makes products that are somewhat alike. So the structure of the market when it pertains to the industry deals with how many firms that are in competition for that particular industry.
The four primary structures are as follows perfect competition, monopoly, oligopoly and monopolistic competition. According to (Flynn, n.d.), each one has a uniqueness about them perfect competition occurs when small firms compete against each other. They are a competitive industry and produce at the lowest level of cost per unit. Monopoly has no competitors in the industry it reduces input which drives up prices causing an increase in profits. Oligopoly is an industry with only a few firms if collision occurs it reduces the output which increases profits causing a monopoly. Monopolistic competition consists of many competing firms each one has a different flair and produce slightly different products (Flynn, n.d.).
2. Explain why economic profits are zero in the long run in a monopolistically competitive market.
Profits are zero in the long run of a monopolistically competitive market when the time period is where all production is variable and can be adjusted to meet the shifts in demand. This is similar to a monopolistic competitive market where there are a number of single sellers...
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.... (2012). Economics of health and medical care (6th ed.). Burlington, MA: Jones & Bartlett Learning
Boundless “Long Run Outcome of Monopolistic Competition.” Boundless Economics. Boundless, 21 Jul. 2015. Retrieved 13 Jan. 2016 from https://www.boundless.com/economics/textbooks/boundless-economics-textbook/monopolistic-competition-12/monopolistic-competition-75/long-run-outcome-of-monopolistic-competition-284-12381/
Boundless. “Product Differentiation.” Boundless Economics. Boundless, 21 Jul. 2015. Retrieved 13 Jan. 2016 from https://www.boundless.com/economics/textbooks/boundless-economics-textbook/monopolistic-competition-12/monopolistic-competition-75/product-differentiation-281-12378/
Riley, G. (n.d.). Government Intervention in Markets | Economics. Retrieved January 13, 2016, from http://www.tutor2u.net/economics/reference/government-intervention-in-markets
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