The concept of market structure is central to both economics and

marketing. Both disciplines are concerned with strategic decision

making. In decision-making analysis, market structure has an
important role through its impact on the decision-making
environment. The extent and characteristics of competition in the
market affect choice behaviour among the actors
In economics, markets are classified according to the structure of the
industry serving the market. Industry structure is categorized on the
basis of market structure variables which are believed to determine
the extent and characteristics of competition. Those variables which
have received the most attention is number of buyers and sellers,
extent of product substitutability, costs, ease of entry and exit, and
the extent of mutual interdependence. In the traditional framework,
these structural variables are distilled into the following taxonomy of
market structures:
 (1) Perfect Competition--many sellers of a standardized
product,
 (2) Monopolistic Competition--many sellers of a differentiated
product,
 (3) Oligopoly--few sellers of a standardized or a differentiated
product, and
 (4) Monopoly--a single seller of a product for which there is no
close substitute.
Market structure is important in that it affects market outcomes
through its impact on the motivations, opportunities and decisions of
economic actors participating in the market. The goal of economic
market structure analysis is to isolate these effects in an attempt to
explain and predict market outcomes

Perfect Competition
In economic theory, perfect competition occurs when all
companies sell identical products, market share does not influence
price, companies are able to enter or exit without barriers, buyers
have perfect or full information, and companies cannot determine
prices. In other words, it is a market that is entirely influenced by
market forces. It is the opposite of imperfect competition, which is
a more accurate reflection of a current market structure.
Consider a farmers’ market where each vendor sells the same type
of jam. There is little differentiation between each of their
products, as they use the same recipe, and they each sell them at
an equal price. At the same time, sellers are few and free to
participate in the market without any barrier. Buyers, in this case,
would be fully knowledgeable of the product’s recipe, and any
other information relevant to the good.
 To make it clearer, a market which exhibits the following
characteristics in its structure is said to show perfect competition:

1. Large number of buyers and sellers

2. Homogenous product is produced by every firm

3. Free entry and exit of firms

4. Zero advertising cost

5. Consumers have perfect knowledge about the market and are well
aware of any changes in the market. Consumers indulge in rational
decision making.

6. All the factors of production, viz. labour, capital, etc, have perfect
mobility in the market and are not hindered by any market factors or
market forces.
7. No government intervention

8. No transportation costs

9. Each firm earns normal profits and no firms can earn super-normal
profits.

10. Every firm is a price taker. It takes the price as decided by the
forces of demand and supply. No firm can influence the price of the
product.

IMPERFECT COMPETITION
Imperfect competition is a competitive market situation where there
are many sellers, but they are selling heterogeneous (dissimilar)
goods as opposed to the perfect competitive market scenario. As the
name suggests, competitive markets that are imperfect in nature.
Imperfect competition is the real-world competition. Today some of
the industries and sellers follow it to earn surplus profits. In this
market scenario, the seller enjoys the luxury of influencing the price
in order to earn more profits.

If a seller is selling a non-identical good in the market, then he can

raise the prices and earn profits. High profits attract other sellers to
enter the market and sellers, who are incurring losses, can very easily
exit the market.

There are four types of imperfect markets:

Monopoly (only one seller) - Oligopoly (few sellers of goods) -
Monopolistic competition (many sellers with highly differentiated
product) - Monopsony (only one buyer of a product)
MONOPOLY
A market structure characterized by a single seller, selling a unique
product in the market. In a monopoly market, the seller faces no
competition, as he is the sole seller of goods with no close substitute.
In a monopoly market, factors like government license, ownership of
resources, copyright and patent and high starting cost make an entity
a single seller of goods. All these factors restrict the entry of other
sellers in the market. Monopolies also possess some information that
is not known to other sellers.

MONOPOLISTIC COMPETITION
Monopolistic competition exists when many companies offer
competing products or services that are similar, but not perfect,
substitutes.
The barriers to entry in a monopolistic competitive industry are low,
and the decisions of any one firm do not directly affect its
competitors. The competing companies differentiate themselves
based on pricing and marketing decisions.
 Monopolistic competition occurs when many companies offer
products that are similar but not identical.
 Firms in monopolistic competition differentiate their products
through pricing and marketing strategies.
 Barriers to entry, or the costs or other obstacles that prevent
new competitors from entering an industry, are low in
monopolistic competition.

Monopolistic competition exists between

a monopoly and perfect competition, combines elements of
each, and includes companies with similar, but not identical,
product offerings.
Restaurants, hair salons, household items, and clothing are
examples of industries with monopolistic competition. Items
like dish soap or hamburgers are sold, marketed, and priced by
many competing companies.
Demand is highly elastic for goods and services of the
competing companies and pricing is often a key strategy for
these competitors. One company may opt to lower prices and
sacrifice a higher profit margin, hoping for higher sales.
Another may raise its price and use packaging or marketing
that suggests better quality or sophistication.
Companies often use distinct marketing strategies
and branding to distinguish their products. Because the
products all serve the same purpose, the average consumer
often does not know the precise differences between the
various products, or how to determine what a fair price may be.

OLIGOPOLY
An oligopoly is a market characterized by a small number of firms
who realize they are interdependent in their pricing and output
policies. The number of firms is small enough to give each firm some
market power.
Oligopoly is distinguished from perfect competition because each
firm in an oligopoly has to take into account their interdependence;
from monopolistic competition because firms have some control
over price; and from monopoly because a monopolist has no rivals.
In general, the analysis of oligopoly is concerned with the effects of
mutual interdependence among firms in pricing and output
decisions.
Many industries have been cited as oligopolistic, including civil
aviation, electricity providers, the telecommunications sector, Rail
freight markets, food processing, funeral services, sugar
refining, beer making, pulp and paper making, and automobile
manufacturing.
1. Homogeneous commodities: In the oligopolistic market
of a primary industry, such as agriculture or mining, the
 commodities produced by such oligopolistic enterprises
will have strong homogeneity.
2. Differentiated commodities: The differentiation of goods
in the manufacturing and service industries will be very
obvious. For example, different clothing companies may
appeal to different demographics, and different mobile
phone brands have different functions and appearances,
etc

DUOPOLY
A duopoly is a type of oligopoly where two firms have dominant or
exclusive control over a market. It is the most commonly studied
form of oligopoly due to its simplicity. Duopolies sell to consumers in
a competitive market where the choice of an individual consumer
can not affect the firm. The defining characteristic of both duopolies
and oligopolies is that decisions made by sellers are dependent on
each other.
There are two principal duopoly models, Cournot
duopoly and Bertrand duopoly:
 The Cournot model, which shows that two firms assume
each other's output and treat this as a fixed amount, and
produce in their own firm according to this.
 Cournot Model in Game Theory In 1838, Antoine A. Cournot
published a book titled "Researches into the Mathematical
Principles of the Theory of Wealth" in which he introduced
and developed this model for the first time. As an imperfect
competition model, Cournot duopoly (also known as
Cournot competition), in which two firms with identical cost
 functions compete with homogenous products in a static
context, is also known as Cournot competition

REVENUE
Revenue is the total amount of income generated by the sale
of goods and services related to the primary operations of
the business.  Commercial revenue may also be referred to
as sales or as turnover. Some companies receive revenue
from interest as car rentals and banks receive most of their revenue
from fees and interest generated by lending assets to other
organizations or individuals.
Revenues from a business's primary activities are reported
as sales, sales revenue or net sales.[2] This includes product returns
and discounts for early payment of invoices. Most businesses also
have revenue that is incidental to the business's primary activities,
such as interest earned on deposits in a demand account. This is
included in revenue but not included in net sales.[6] Sales revenue
does not include sales tax collected by the business.
Other revenue (a.k.a. non-operating revenue) is revenue from
peripheral (non-core) operations. For example, a company that
manufactures and sells automobiles would record the revenue from
the sale of an automobile as "regular" revenue. If that same
company also rented a portion of one of its buildings, it would record
that revenue as “other revenue” and disclose it separately on its
income statement to show that it is from something other than its
core operations. The combination of all the revenue-generating
systems of a business is called its revenue model.[7]
, royalties, or other fees.
In general usage, revenue is the total amount of income by the sale
of goods or services related to the company's operations Sales
revenue is income received from selling goods or services over a
period of time. Tax revenue is income that a government receives
from taxpayers. Fundraising revenue is income received by
a charity from donors etc. to further its social purposes.
Business revenue is money income from activities that are ordinary
for a particular corporation, company, partnership, or sole-
proprietorship. For some businesses, such
as manufacturing or grocery, most revenue is from the sale of goods.
Service businesses such as law firms and barber shops receive most
of their revenue from rendering services. Lending businesses such

TR- “Total revenue is the sum of all sales receipts or income

of a firm.”
AR- “The average revenue curve shows that the price of the
firm’s product is the same at each level of output.”
MR- “The marginal revenue is the change in total revenue
resulting from selling an additional unit of the commodity.”

PROFIT
A profit is the difference between the revenue that an economic
entity has received from its outputs and the opportunity costs of its
inputs.[1] It equals to total revenue minus total cost, including both
explicit and implicit costs.
Different from accounting profit, it only relates to the explicit costs
which appear on a firm's financial statements.
An accountant measures the firm's accounting profit as the firm's
total revenue minus only the firm's explicit costs.
An economist includes all opportunity costs, both explicit and implicit
cost, when analysing a firm. Therefore, economic profit is smaller
than accounting profit.[3] For a business to be profitable from an
economist's standpoint, total revenue must cover all the opportunity
cost.
Normal profit is often viewed in conjunction with economics profit.
Normal profits in business refer to a situation where a company
generates revenue that is equal to the total costs incurred in its
operation, thus allowing it to remain operational in a competitive
industry. It is the minimum profit level that a company can achieve
to justify its continued operation in the market where there is
competition. In order to determine if a company has achieved
normal profit, they first have to calculate their economic profit. If the
company's total revenue is equal to its total costs, that means its
economic profit is equal to zero, then the company is in a state of
normal profit. It must be noted that normal profit occurs when
resources are being used in the most efficient way at the highest and
best use. 

BREAK EVEN POINT

The break-even point (break-even price) for a trade or investment is
determined by comparing the market price of an asset to the original cost; the
breakeven point is reached when the two prices are equal.
In corporate accounting, the break-even point formula is
determined by dividing the total fixed costs associated with
production by the revenue per individual unit minus the variable
costs per unit. In this case, fixed costs refer to those which do not
change depending upon the number of units sold. Put differently,
the break-even point is the production level at which total revenues
for a product equal total expense.

EQUILIBRIUM OF A FIRM
A firm is in equilibrium when it has no desire to change (increase or
decrease) its output levels. At the equilibrium point, the firm earns
maximum profits. 
A firm is said to be in equilibrium when it has no incentive either to
expand or to contract its output. A firm would not like to change its
level of output only when it is earning maximum money profits.
Hence, making a maximum profit or incurring a minimum loss is an
important condition of a firm’s equilibrium. We shall presently
discuss fully the conditions of a firm’s equilibrium.

The equilibrium of the firm is usually discussed in terms of marginal

cost and marginal revenue. Now, before explaining the conditions of
equilibrium of a firm, it is necessary to describe the concept of
marginal revenue and its relation with average revenue.