How To Master The Chapter On Market Structure?
Any economics tutor will tell you that they have come across many students who struggled with the chapter on market structure. Time and time again, market structure has proved to be too difficult for too many students. Surprising to some, a significant number of these students take economics tuition. I have spent a great deal of time trying to figure out the reason and have come out with a few ways to make the chapter easier and more interesting for students to learn.
Perfect Competition And Imperfect Competition
Standard economics textbooks, including the best-selling economics textbook (Economics – A Singapore Perspective) written by the super economics tutor who provides economics tuition to students in junior college, Mr. Edmund Quek, begins the chapter on market structure with perfect competition. Although the market structure of perfect competition is taught at the start as it can be used as a benchmark to study other market structures, it does not exist in reality. Therefore, students may find it difficult to relate to. In order to better understand the chapter on market structure, students can ask their economics tutor to provide an outline of the chapter starting with imperfect competition which includes monopoly, oligopoly and monopolistic competition. As monopoly, oligopoly and monopolistic competition do exist in reality, an understanding of these market structures will help them better understand perfect competition.
Identification Of Important Diagrams
One major difficulty which many students face when studying the chapter on market structure is the large number of diagrams they will be taught. Many students have tried to learn the diagrams by heart but without much success. The truth is that not all the diagrams in the chapter on market structure are important. Indeed, many of the diagrams are not needed in the examination. With the help of a good economics tutor, students can distinguish between the diagrams which are simply for understanding and those that are useful in the examination.
Identification Of Important Types Of Questions
It is important for students to identify two important types of questions on market structure in order to master the chapter. This can easily be done with the help of a good economics tutor and particularly true in view of the large number of economics tuition providers in Singapore. The first type of questions require students to be able to compare the advantages and disadvantages of the four market structures in terms of their performance indicators which include productive efficiency, allocative efficiency, price, dynamic efficiency, consumer choice and income equity. In addition to the six performance indicators, the concept of price discrimination is often applicable to this type of questions, although it is not considered to be a performance indicator of market structure. The second type of questions requires students to be able to compare the characteristics of the four market structures. This type of questions, at first thought, may seem easier to many students. However, what the examiners are looking in the responses to this type of questions is more than the differences in the characteristics of the four market structures. Rather, they expect students to discuss the implications of the differences. For example, as the number of firms in a monopolistically competitive market is large, there exist many substitutes. Therefore, the demand for the good produced by each firm is likely to be price elastic. It follows that a monopolistically competitive firm is likely to charge a price substantially higher than its marginal cost. In contrast, as the number of firms in an oligopolistic market is smaller, there are fewer substitutes. Therefore, the demand for the good produced by each firm is likely to be less price elastic compared to a firm in a monopolistically competitive market. It follows that the difference between the price charged by an oligopolistic firm and its marginal cost is likely to be smaller than that of a firm in a monopolistically competitive market. The concept of price elasticity of demand can be learned in economics tuition with an experienced economics tutor.
Benjamin Tay
Economics Tuition Singapore @ Economics Cafe
Principal Economics Tutor: Mr. Edmund Quek