Understanding Market Structures in Economics

This video provides an overview of different market types encountered in economics, including product and resource markets. It explains key market structures such as monopoly, perfect competition, oligopoly, and monopolistic competition, highlighting their characteristics, examples, and implications. The video also introduces the concept of monopsony, where one buyer dominates the market.

What is the primary difference between product markets and resource markets?

• Product markets involve consumer goods, while resource markets involve production inputs.

• Product markets deal with inputs, while resource markets deal with outputs.

• Resource markets are for services, while product markets are for goods.

• Resource markets have more players than product markets.

Which of the following is a characteristic of a monopoly?

• No control over prices

• One firm dominating the market

• Many firms competing

• Low barriers to entry

Why might a government grant a monopoly to a firm?

• To reduce prices for consumers

• To increase competition

• To eliminate all other firms

• To allow the firm to recoup R&D investments

In a perfectly competitive market, firms are considered to be:

• Price setters

• Price takers

• Oligopolists

• Monopolists

Which market structure is closest to perfect competition?

• Monopolistic competition

• Agricultural commodities

• Monopoly

• Oligopoly

What is a defining feature of an oligopoly?

• Many small firms

• Complete product differentiation

• No barriers to entry

• A few large firms dominate

Which industry is often cited as an example of an oligopoly?

• Textile industry

• Local restaurants

• Aircraft manufacturing

• Grocery stores

What distinguishes monopolistic competition from perfect competition?

• Price setting ability

• Product differentiation

• Higher barriers to entry

• Fewer firms

Which of the following is an example of monopolistic competition?

• Electricity supply

• Breakfast cereals

• Public transportation

• Airline industry

What is a monopsony?

• No buyers or sellers

• One seller and many buyers

• One buyer and many sellers

• Many buyers and sellers