Market structures flashcards

Perfect Competition

A market structure with many firms, identical products, and no barriers to entry.

Monopoly

A market structure where a single firm dominates and has significant pricing power.

Oligopoly

A market with a few large firms, where each firm can influence prices.

Monopolistic Competition

Many firms compete, but products are differentiated, allowing for some price control.

Characteristics of Perfect Competition

- Many buyers and sellers - Homogeneous products - Free entry and exit

True or false: A monopoly has many competitors.

False, because a monopoly is characterized by a single seller.

Difference between Monopoly and Oligopoly

Monopoly has one seller, while Oligopoly has few sellers that can affect the market.

Fill in the blank: In a monopoly, the firm is a _______.

price maker, meaning it sets prices to maximize profits.

Collusion

An agreement among firms in an oligopoly to set prices or output to increase profits.

Demand Curves in Perfect Competition

Perfectly elastic because firms are price takers.

Price Discrimination

Charging different prices to different consumers for the same product.

True or false: Monopolistic competition allows for identical products.

False, because products are differentiated in monopolistic competition.

Examples of Monopolistic Competition

- Restaurants - Clothing brands - Hair salons

Market Entry Barriers

Obstacles that make it difficult for new firms to enter a market.