Differentiate between the four levels of competition and offer examples of each type.

Question

What will be an ideal response?

Answer 1

The four levels of competition are monopoly, oligopolistic competition, monopolistic competition, and pure competition (examples will vary). 
In a monopoly, one firm provides the product or service in a particular industry, which results in less price competition. Power and other utility companies would be examples of monopolies. 
In oligopolistic competition, only a few firms dominate the market. Firms typically change their prices in reaction to competition to avoid upsetting an otherwise stable competitive environment. Examples of oligopolistic markets include the soft drink market and commercial airline travel. 
Monopolistic competition occurs when there are many firms competing for customers in a given market but their products are differentiated. There are many examples of this type of competition. The text lists sunglasses as one such example. 
In a purely competitive environment, a large number of sellers offer standardized products or commodities that consumers perceive as substitutable. Examples include commodities such as grains, gold, meat, spices, or minerals.