Course Code: BUS-8503

Business Economics
Submitted To:
Md. Shariful Islam
Asst. Professor
Bangladesh University of Professionals
Submitted by:
Shah Md. Sad Anwar
ID: 16011046
Section: 11 (B)
MBA (Professional)
 A market is a group of buyers and sellers of a particular product.

A market is one of the many varieties of systems, institutions, procedures, social

relations and infrastructures whereby parties engage in exchange. While parties may
exchange goods and services by barter, most markets rely on sellers offering their
goods or services (including labor) in exchange for money from buyers. It can be said
that a market is the process by which the prices of goods and services are
established. Markets facilitate trade and enable the distribution and allocation of
resources in a society.
 In economics, "competition" is the rivalry among sellers trying to achieve such goals as
increasing profits, market share, and sales volume by varying the elements of the marketing
mix: price, product, distribution, and promotion.

Merriam-Webster defines competition in business as "the effort of two or more parties

acting independently to secure the business of a third party by offering the most favorable
terms."

A competitive market is one with many buyers and sellers, each has a negligible effect on
price.

For a market to be competitive, there must be more than a single buyer or seller. It has been
suggested that two people may trade, but it takes at least three persons to have a market,
so that there is competition in at least one of its two sides. However, competitive markets,
as understood in formal economic theory, rely on much larger numbers of both buyers and
sellers.
Perfect competition is a market structure
in which the following five criteria are
met:
1) All firms sell an identical product
2) All firms are price takers - they cannot
control the market price of their product
3) All firms have a relatively small market
share
4) Buyers have complete information
about the product being sold and the
prices charged by each firm and
5) The industry is characterized by
freedom of entry and exit. Perfect
competition is sometimes referred to as
"pure competition".
 A monopoly is a market structure in which there is only one producer/seller for a
product. In other words, the single business is the industry.
Entry into such a market is restricted due to high costs or other impediments,
which may be economic, social or political.
For instance, a government can create a monopoly over an industry that it wants
to control, such as electricity.
Another reason for the barriers against entry into a monopolistic industry is that
oftentimes, one entity has the exclusive rights to a natural resource. For
example, in Saudi Arabia the government has sole control over the oil industry.
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 oligopoly has
high barriers to entry. The products that the oligopolistic firms produce are often
nearly identical and, therefore, the companies, which are competing for market
share, are interdependent as a result of market forces.
 monopoly exists when there is only one supplier
of a good or service, but there are many
consumers.
monopoly has first movers advantage and can set
prices lower to thwart a firm's entry.
A monopoly also has absolute product
differentiation because there are no other
comparable goods or services.
Some characteristics of a monopolistic market
are:
price maker
profit maximization
one seller and producer
higher barriers to entry
Thank You All!