Introduction to Market Structure

Front

What is market structure?

Back

Market structure describes the key traits of a market, including the number of sellers, types of products sold, barriers to entry and exit, and whether firms are price takers or price makers.

Front

What are the four models of market structure?

Back

The four models of market structure are Perfect Competition, Monopoly, Monopolistic Competition, and Oligopoly.

Front

What characterizes perfect competition?

Back

Perfect competition is characterized by many firms selling homogeneous products, easy entry and exit, and firms being price takers.

Front

What are the barriers to entry in perfect competition?

Back

There are no barriers to enter; it requires a small amount of capital, and raw materials can be easily obtained.

Front

What does it mean for a firm to be a price taker?

Back

A price taker is a firm that cannot set the market price and must accept the price determined by supply and demand.

Front

What is a monopoly?

Back

A monopoly is a market structure where there is only one seller who has exclusive rights to sell a unique product.

Front

What are the characteristics of a monopoly?

Back

Monopolies have high barriers to entry, are price makers, and sell unique products with no close substitutes.

Front

What is monopolistic competition?

Back

Monopolistic competition is a market structure with many sellers offering differentiated products.

Front

How do firms in monopolistic competition differentiate their products?

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Firms differentiate their products through packaging, fragrance, color, and advertising.

Front

What are the characteristics of oligopoly?

Back

Oligopoly is characterized by a few large producers, high barriers to entry, and firms being price makers.