There are a range of different market structures in an economic system. The main characteristics of each market vary depending on the sector and the companies linked to that sector. In a mixed economy, it is important for a business to understand what type of market structure it operates in, because customers can choose from a wide range of products, directly affecting price, demand and supply levels. The main types of market are called perfect competition, monopolistic competition, oligopoly and monopoly. PERFECT COMPETITION: This is a very important market structure, in which there are a large number of companies, all quite small relative to the size of the market. total market and it is easy for new companies to join or leave the sector because the barriers are low. Perfect competition is a market in which all firms produce a homogeneous product, that is, the products are identical, and there is no advantage for existing firms, since all producers compete on an equal footing. Assuming perfect competition, there are many buyers and sellers, extensive market knowledge, and prices are determined by supply and demand. Although this is an unrealistic market structure, the closest example of perfect competition is the agricultural scenario. The price is set by the interaction of supply and demand, which is one of the implications of this type of market. Firms in perfect competition are said to be price takers, meaning that they must accept the price offered by the market and make a decision on how much product to produce. However, in some societies we might consider agriculture a poor example of perfect competition, as businesses become larger and larger and the agricultural sector dominates the market, for example... middle of paper .... .. for £2, 40 cash for one rate and decided to provide an extra unit. The new supply number is therefore 701; however, the downward-sloping market demand curve suggests that the new price will be lower than before. In other words, TFL cannot distinguish its price, since it must provide 701 buses for the same one-way cash fare of £2.40. On the other hand, TFL will get more revenue from this extra bus because more people will be able to use public transportation instead of their car or bike. The marginal revenue the monopolist receives from supplying 1 additional unit is equal to the price it receives for that unit minus the revenue loss from selling N units of output at a lower market price. Thus, the price the monopolist receives from selling N + 1 units exceeds the marginal revenue it receives from providing the additional unit of output. (Notes on the cliffs)