3.1 Explain how the market structures determine the pricing and output decision using examples.
There are different kinds of market structures in different economies, sectors and goods. Acccordingly
In perfectly competitive market a single organization is so small compared to the market that it cannot affect the price. Price in the market is equal to the marginal cost of production.
In perfectly competitive market a
In monopoly, the monopolistic can change the prices, as it is the sole provider of the good so the monopolistic has the market power. But in this situation if the price increases quantity demand decreases. Therefore the monopolistic must take under consideration both the positive and negative effects of increase in price.
Pricing is more complicated and it depends upon the strategies interaction among the firms.