Types of Market Structures

What do market structures provide a starting point for?

• Assessing economic environments in business

• Determining relations between sellers and buyers

• Setting market prices

• Controlling the distribution of market share

What are the basic defining characteristics of a market structure?

• The commodity or item that’s sold and the extent of production differentiation

• The ease or difficulty of entering and exiting the market

• The distribution of market share for the largest firms

• All of the above

What is pure competition market structure defined by?

• A large number of small firms competing against each other

• A single firm with significant marketing power

• A limited number of dominant firms collaborating with each other

• A single firm that controls the entire market

What determines the amount of goods and services produced in a pure competition market structure?

• Supply and demand

• Market prices set by the companies

• The number of buyers and sellers

• The relationship between sellers

What is monopolistic competition market structure characterized by?

• A large number of small firms selling identical products

• A large number of small firms selling highly differentiated products

• A limited number of dominant firms collaborating with each other

• A single firm that controls the entire market

What gives firms in monopolistic competition market power?

• Lowest possible cost production

• Remarkably similar products

• Small differences in products

• High barriers to entering and exiting the market

What is an oligopoly market structure dominated by?

• A large number of small firms

• A single firm with significant marketing power

• A few dominant firms

• A single firm that controls the entire market

What can oligopolies do with their collective market power?

• Drive up prices and earn more profit

• Collaborate with each other to set market prices

• Increase the number of firms in the market

• Lower production levels to reduce costs

What is a pure monopoly characterized by?

• A large number of small firms competing against each other

• A large number of small firms selling highly differentiated products

• A single firm that controls the entire market

• A limited number of dominant firms collaborating with each other

Why is entry or exit blocked in a pure monopoly?

• Due to high barriers to entering and exiting the market

• Because there are no close substitutes for the product

• To maintain control over raw materials and patents

• To increase prices and earn more profit