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LMS ACTIVITY
(MARKET STRUCTURES)
No of sellers and Many/numerou Few sellers One seller One buyer Numerous
buyers s sellers and sellers and
buyers buyers
Market entry Free entry and Some scale With restrictions/Scale Free entry
exit barriers/Contest and legal barriers; Gov’t and exit
able market barriers
1. Why is decreasing the price of product in order to win buyers is not healthy for a seller in
a perfect competition?
He/she will have lesser profit since the cost of production has increased while his/her
3. What would be the benefit of having a free entry and exit in the market?
One can easily put up a business if he/she feels that it is profitable and leave when it is
not.
The single seller can set a lower output at a higher price to maximize profit while a single
6. In oligopoly, products are homogeneous but can be differentiated? How can this be
done?