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    Applied - Econ Lesson 2 Market Structures

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    Maetherese Saradpon
    This document discusses market structures and models. It defines four main types of market structures: perfect competition, monopoly, monopolistic competition, and oligopoly. For each market structure, it provides 2-5 defining characteristics, such as the number of buyers and sellers, ease of entry into the market, similarities of products, and control of pricing. The types of market structures are determined by factors like government policies, technology, business practices, and economic freedom.

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    Applied - Econ Lesson 2 Market Structures

    Uploaded by

    Maetherese Saradpon
    22 views9 pages
    This document discusses market structures and models. It defines four main types of market structures: perfect competition, monopoly, monopolistic competition, and oligopoly. For each market structure, it provides 2-5 defining characteristics, such as the number of buyers and sellers, ease of entry into the market, similarities of products, and control of pricing. The types of market structures are determined by factors like government policies, technology, business practices, and economic freedom.

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    This document discusses market structures and models. It defines four main types of market structures: perfect competition, monopoly, monopolistic competition, and oligopoly. For each market structure, it provides 2-5 defining characteristics, such as the number of buyers and sellers, ease of entry into the market, similarities of products, and control of pricing. The types of market structures are determined by factors like government policies, technology, business practices, and economic freedom.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    22 views9 pages

    Applied - Econ Lesson 2 Market Structures

    Uploaded by

    Maetherese Saradpon
    This document discusses market structures and models. It defines four main types of market structures: perfect competition, monopoly, monopolistic competition, and oligopoly. For each market structure, it provides 2-5 defining characteristics, such as the number of buyers and sellers, ease of entry into the market, similarities of products, and control of pricing. The types of market structures are determined by factors like government policies, technology, business practices, and economic freedom.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 9

    Lesson 2 Market Structures

    Market structure refers to the competitive


    environment in which buyers and sellers operate.
    Competition is rivalry among various sellers in the
    market.

    The market is a situation of diffused, impersonal


    competition among sellers who compete to sell their
    goods and among buyers who use their purchasing
    power to acquire the available goods in the market.
    There are varying degrees of competition in the market
    depending on the following factors: 

    Number and size of buyers and sellers

    Similarity or type of product bought and sold

    Degree of mobility of resources

    Entry and exit of firms and input owners

    Degree of knowledge of economic agents regarding prices, costs,


    demand, and supply conditions
    Market Models Defined

    1. Perfect Competition - the market has a lot of independent


    sellers. These independent sellers offer the same goods. That is
    why they have to compete against each other. Each seller is
    trying to get more profit than the others.

    2. Monopoly - exists when a single firm that sells in the market


    has no close substitutes. The existence of a monopoly depends
    on how easy it is for consumers to substitute the products for
    those of other sellers.

    3. Monopolistic Competition - this means there is almost a


    large number of small sellers selling goods which are similar
    but not the same.
    4. Oligopoly - is a market dominated by a small number of
    strategically interacting firms. Few sellers account for most of the
    total production since barriers to free entry make it difficult for new
    firms to enter.

    Characteristics of Market Models

    Perfect Competition

    1. There is a large number of independent sellers.

    2. Products are all the same.

    3. No one seller and no one buyer can cause a change in the price of
    a good.
    5. It is easy for new firms to enter the market. It is also easy for
    firms that are already there to leave the market.

    6. There is no competition that does not include prices.

    Monopoly

    1. There is only one producer or seller.

    2. Not all the products are exactly the same.

    3. The monopolist chooses the price.

    4. It is very hard for new firms to enter the market.

    5. There may or may not be a lot of promotion of the goods sold by


    the monopolist. By promotion we mean billboards or commercials.
    Monopolistic Competition

    1.There are many sellers acting independently.

    2.Products are not all the same. The products look different from
    each other. They are also sold in different places. There are different
    commercials and billboards for them.

    3.There is a limited control of price. Some sellers can decrease or


    increase their prices a little. This is because their products are
    different.

    4.New firms do not have a very hard time entering the market.

    5.There is more non-price competition. Non-price here means firms


    have to try to have better services and better places to sell.
    Oligopoly

    1.Only some firms are powerful in the market. Each firm produces a
    big part of the total output of the industry.

    2.Products are either the same or different.

    3.The producers agree on a price depending on what each of them


    wants. The biggest among the sellers is called the price leader.

    4.It is hard for new firms to enter the market.

    5.There is a lot of product promotion among those who make


    different goods.
    Determinants of Market Structure

    1. Government laws and policies

    2. Technology

    3. Business policies and practices

    4. Economic freedom

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