explain the classification of markets
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A market can have a number of interconnected characteristics, including level of competition, number of sellers and buyers, type of products, and barriers to entry and exit. These interlinked characteristics are combined to form a market structure. Among various characteristics of a market, the level and nature of competition contribute a significant part in the classification of market structure.
Depending on the degree and type of competition, market structures can be grouped into three main categories, namely, purely competitive market, perfectly competitive market, and imperfectly competitive market. A purely competitive market is one which is characterized by a large number of independent sellers and buyers dealing in standardized products.
A perfectly competitive market is a wider term than a purely competitive market. In a perfectly competitive market, a large number of buyers and sellers are involved in the transaction of homogenous products. In this type of market, buyers and sellers are fully aware about the prices of products.
Therefore, the market price of a product is fixed in a perfectly competitive market. However, this type of market structure cannot exist in the real world. On the other hand, an imperfectly competitive market is defined as a market in which buyers and sellers deal in differentiated products. Moreover, in an imperfectly competitive market, sellers have the power of influencing the market price of products
Depending on the degree and type of competition, market structures can be grouped into three main categories, namely, purely competitive market, perfectly competitive market, and imperfectly competitive market. A purely competitive market is one which is characterized by a large number of independent sellers and buyers dealing in standardized products.
A perfectly competitive market is a wider term than a purely competitive market. In a perfectly competitive market, a large number of buyers and sellers are involved in the transaction of homogenous products. In this type of market, buyers and sellers are fully aware about the prices of products.
Therefore, the market price of a product is fixed in a perfectly competitive market. However, this type of market structure cannot exist in the real world. On the other hand, an imperfectly competitive market is defined as a market in which buyers and sellers deal in differentiated products. Moreover, in an imperfectly competitive market, sellers have the power of influencing the market price of products
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