Briefly outline the differences between the types of market structures.
There are three major differences between the types of market structures. They differ in terms of:
Number of sellers. Perfect competition has a large number of sellers. Monopolistic competition has many sellers, but not usually as many as perfect competition. Oligopoly only has a few sellers and a monopoly only has one.
Type of product. Firms in perfect competition sell homogeneous products than are essentially identical. Firms in monopolistic competition sell differentiated products that are not all the same (for example, restaurants are in monopolistic competition because they sell different kinds of food and have different atmospheres, among other things). Oligopolies can sell either homogeneous or differentiated products while a monopoly sells a unique product.
Entry conditions. Firms can very easily enter or exit a perfectly competitive market. It is only a little harder to enter a monopolistically competitive market. It is difficult to enter an oligopoly and impossible for firms to enter a monopoly.