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The absence of such barriers does not affect the prices, and there is always a substitute for suppliers, who enters and leaves if, wants. If any losses occur the firm will exist the industry without any reason. This is important to understand the free entry and free exist is possible in the long-time firm.

Homogeneous product

There another condition of perfect competition is homogeneous product that is a product offer for sale by seller. It must be goods offers for sale and perfect substitutes of one another seller. One firm cannot differentiate the same products sold in the industry because buyers can identify the difference in terms of colors, quality and packing. There is mean, even though the products are same in nature but there is difference in terms of quality. Seller cannot raise the price above the prevailing price or lower the price. Homogeneity of product has an important implication for the market if products of different seller. Besides that, buyers not care who they buy from, as long as the price is same.

Maximum profits

In the perfect competition, profit maximization determine by the quantity of product they sell. The marginal cost by the product of a single unit of the product is equal to the marginal revenue. Total revenue and total cost approach are the profit maximization. When the cost is lowest, and then only can be maximum profit.

3.1.2 Monopolistic competition

The concept monopolistic competition is more realistic than perfect competition. Monopolistic competition market each firm has its own price policy. The most things from another thing feature of monopolistic competition are the products of various firms are not identified. But they are close substitutes for each others. In the case, monopolistic and perfect competition is characteristic by the existence of sellers. The firms do not produce perfect substitutes. Otherwise, each firm has a small percentage of the total monopolistic market and thus has limited control over market price.

Product differentiates.

Under monopolistic competition, product differentiation may entail physical or qualities differences in the products by their selves. There output product are differentiated between which are relatively close substitutes for each other. So that, that product prices cannot be very much different from each other. Product differentiated by location, services, designs, and brand names. The firms in monopolistic competition will differentiated their products and make them more appealing to the customers in order to maximize their profits.

Control over price

In the short run of monopolistic competition acts like monopoly. Its can increase their prices in at time because they differentiated their product. It is a unique feature of monopolistic competition. In such type of market, due to product differentiation, every firm has to incur some additional expenditure in the form of selling cost. This cost includes sales promotion expenses, advertisement expenses, and salaries of marketing staff. But on account of homogeneous product in perfect competition and zero competition in monopoly, selling cost does not exist there.

3.1.3 Oligopoly

In an oligopoly, there are only a few firms that make up an industry. This select group of firms has control over the price and, like a monopoly; an 本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。