Describe the peculiarities of monopoly

The word monopoly has been derived from the combination of two words i.e., ‘Mono’ and ‘Poly’. Mono refers to a single and poly to control.In this way, monopoly refers to a market situation in which there is only one seller of a commodity. “Monopoly is a market situation in which there is a single seller. There are no close substitutes of the commodity it produces, there are barriers to entry”. –Koutsoyiannis

We may state the features of monopoly as:

 

1. One Seller and Large Number of Buyers:

The monopolist’s firm is the only firm; it is an industry. But the number of buyers is assumed to be large.

 

2. No Close Substitutes:

There shall not be any close substitutes for the product sold by the monopolist. The cross elasticity of demand between the product of the monopolist and others must be negligible or zero.

 

3. Difficulty of Entry of New Firms:

There are either natural or artificial restrictions on the entry of firms into the industry, even when the firm is making abnormal profits.

 

4. Monopoly is also an Industry:

Under monopoly there is only one firm which constitutes the industry. Difference between firm and industry comes to an end.

 

5. Price Maker:

Under monopoly, monopolist has full control over the supply of the commodity. But due to large number of buyers, demand of any one buyer constitutes an infinitely small part of the total demand. Therefore, buyers have to pay the price fixed by the monopolist.

 

Describe the peculiarities of oligopoly

1. High Profits
Since there is such little competition, the companies that are involved in the market have the potential to bring a large amount of profits. The services and goods that are controlled through oligopolies are generally highly needed or wanted by the large majority of the population.

2. Simple Choices
Having only a few companies that offer the goods or service that you are looking for makes it easy to compare between them and choose the best option for you. In other markets it can be difficult to thoroughly look at all of the competitors to compare pricing and services offered.

3. Competitive Prices
Being able to easily compare prices forces these companies to keep their prices in competition with the other companies involved in the market. This is a great benefit for the consumers because prices continually go lower as other companies lower there prices.

4. Better Information and Goods
Right along with price competition, product competition plays a huge part in a the oligopoly market structure. Each company scrambles to come out with latest and greatest thing in order to sway consumers to go with their company over a different one. This also goes with the advertising and amount of information and support that they provide their customers.

Describe the peculiarities of monopolistic competition

1. In case of monopolistic competition buyers get plenty of options due to differentiated products as every product has some additional feature which is not the case with perfect competition where sellers sell homogeneous products or in monopoly where sellers do not bother to add new features to product as there is no competition.

2. Another advantage of monopolistic competition is that since different companies are selling differentiated products they tend to advertise about it through various channels of communication which make customers more aware about the various products and their features which in turn helps the customers in making informed decision by comparing the features of various products.

3. It helps in innovation because the only thing which will help the company in surviving in case of monopolistic competition is to constantly add new features to product and hence in a way one can say that monopolistic competition forces the companies to invest in research and development so that the company can produce better quality product at cheaper rates than their competitor.

What is labour productivity?

Labour productivity is concerned with the amount (volume) of output that is obtained from each employee. It is a key measure of business efficiency, particularly for firms in which the production process is labour-intensive.

Why does labour productivity matter?

• Labour costs are usually a significant part of total costs
• Business efficiency and profitability closely linked to productive use of labour
• In order to remain competitive, a business needs to keep its unit costs down

Achieving high (or higher) labour productivity is not a simple task. Several factors influence how productive the workforce is: e.g.

• Extent and quality of fixed assets (e.g. equipment, IT systems)
• Skills, ability and motivation of the workforce
• Methods of production organisation
• External factors (e.g. reliability of suppliers)