See how much you can earn based on the market you are in

Every person has needs to satisfy those needs they mainly tries to increase their income. As you know higher income means a person can buy more of those goods which gives him high satisfaction. Everyone does one or other to increase to their income of them investing is main activity, but to invest wisely in this changing economic conditions one should have a sound knowledge about markets which he is entering and know which factors affect his decisions.

To know the market structure there are some basic points to look at

·        Commodity or item sold and the differentiation between them.

·        Number of firms in the market and how ease or difficult it is to enter in to the market.

·        The relationship between the customers and the sellers.

There are four types of market structures they are as follows:

v Perfect competition:

The perfectly competitive market structure is normally the ideal market structure. There is free entry and exit so many firms comes and goes in the market whenever they want. The forces of supply and demand determine the amount of price along with the quantity of goods or services produced. As there are many competitors the influence of one does not affect the market as a whole so we can say the buyers and sellers as price takers rather than price influencers.

Ex: It is difficult to find a perfectly competitive market but we can take agricultural markets as one example.

v Monopolistic competition:

This is completely different from perfectly competition. Companies in this market sell similar products but with small differences which they use as a criteria to sell those goods. The producers are price maximizers in this market, when the prices are attractive the producers enter the market. It is a hybrid of two extremes perfect competition and monopoly.

Ex: Consider a toothpaste industry where they are pretty much the same but small changes like taste, flavours are used to sell their goods.

v Monopoly:

Monopoly is quite opposite to perfectly competition, where as there are many players in perfectly competition there is only one supplier in monopoly. The supplier is the price maker and puts a price that maximizes his profits. The entry is not so easy as the barriers are high.

Ex: Microsoft is the perfect example

v Oligopoly:

The oligopoly markets have companies that collide to limit the competition and dominate the market or industry. The companies in this market may be big or small but they may have benefits like patents, resources or control over raw materials that make hard for new entries into the market. The market is price sensitive means if the prices are high the customer go for the substitute products.

Ex: The airline industries is a good example and the gasoline provides are also to be considered.