Chapter 9: Market Structure in the Health Sector Flashcards
Any place at which the individual needing medical and non-medical goods and services can communicate with the one producing medical and non-medical goods and services.
Market
Three things to consider with Market
- Types of goods and services being traded
- The number and size of buyers and sellers in the market
- The degree to which information can flow freely
What are the four types of Market
- Perfect Competition
- Monopolistic Competition
- Oligopoly
- Monopoly
Does not exist in the real world and can only be examined through perfect competition
Perfect/Pure Market
It is an abstract concept or model and involves necessary conditions
Perfect Competition
Two critical Assumptions that build Perfect Competition
- The behavior of an individual firm
2. the nature of an industry in which it operates
What is the principal aim of a firm
Maximize profits
The demand curve faced by firms is _______
Horizontal
When the price of the product is CONSTANT, the change in total revenue is ____ to price
Equal
P=MR
The firm will maximize profits by producing at the level of output where Marginal Revenue is _____ to Marginal Cost
Equal
MR = MC
A market situation where in the conditions necessary for perfect competitions are not satisfied.
Imperfect Market
Forms of Imperfect Market
Monopoly
Monopolistic Competition
Oligopoly
Greek word which means one
Monos
Greek word which means sell
Polein
Under this situation, there is only one seller of goods or services
Monopoly
________ is a product market characterized by one seller, perfect barriers to entry, and has considerable control over the price.
Monopoly
Price Maker
Monopolist
Price Taker
Firm
The _______ can influence and has considerable control over the price
Monopolist
Refers to a market situation in which firms agree to cooperate with one another to behave as if they were a single firm.
Cartel
The most common example of a cartel is the _______ of ______ _____ _______
OPEC
Organization of Petroleum Exporting Countries
Monopolies are classified according to…
Cost Structure of the Industry
Possibly the result of law
or by other means
It is a market situation where a single firm can supply the entire market due to the fundamental cost structure of the industry.
Natural Monopoly
Sometimes called as “de jure monopoly”
Legal Monopoly
A form of monopoly which the government grants to a private individual
Legal Monopoly
A form of monopoly whose existence as the sole producer and distributor of goods and services is by means of coercion (legal or illegal), so that most of the time it violates the principle of free market just to avoid competition.
Coercive Monopoly
It is a market situation in which there are many sellers producing moderate differentiated products.
Monopolistic Competition
Greek word which means few
Oligo
Greek word which means sell
Polein
Is a market structure with few large and relatively high barriers to entry.
Oligopoly
Is a formal agreement among oligopolists to set-up a monopoly price, allocate output, and share profit among members.
Cartel
Is a formal and informal agreement among oligopolists to adopt policies that will restrict or reduce the level of competition in the market.
Collusion
Defined as the demand curve of the individual firm in oligopolistic market
Kinked demand curve
(Pg 206) Which type of market?
Number of sellers: LARGE NUMBER OF SELLERS
Perfect Competition
(Pg 206) Which type of market?
Number of sellers: MANY
Monopolistic Competition
(Pg 206) Which type of market?
Number of sellers: FEW, SMALL NUMBER OF FIRMS
Oligopoly
(Pg 206) Which type of market?
Number of sellers: ONLY ONE SELLER
Monopoly
(Pg 206) Which type of market?
Degree of control over price: PRICE TAKER
Perfect Competition
(Pg 206) Which type of market?
Degree of control over price: LIMITED CONTROL
Monopolistic Competition
(Pg 206) Which type of market?
Degree of control over price: SUBSTANTIAL CONTROL OVER PRICE
Oligopoly
(Pg 206) Which type of market?
Degree of control over price: PRICE DICTATOR/PRICE MAKER
Monopoly
(Pg 206) Which type of market?
Type of Product : HOMOGENOUS PRODUCT
Prefect Competition
(Pg 206) Which type of market?
Type of Product : DIFFERENTIATED PRODUCT
Monopolistic Competition
(Pg 206) Which type of market?
Type of Product : HOMOGENOUS OR DIFFERNTIATED
Oligopoly
(Pg 206) Which type of market?
Type of Product : HIGHLY STANDARDIZED
Monopoly
(Pg 206) Which type of market?
Barriers to Entry : NONE
Perfect and Monopolistic Competition
(Pg 206) Which type of market?
Barriers to Entry : SUBSTANTIAL
Oligopoly
(Pg 206) Which type of market?
Barriers to Entry : COMPLETE
Monopoly
(Pg 206) Which type of market?
Degree of consumer Information : PERFECT
Pefect Competition
(Pg 206) Which type of market?
Degree of consumer Information : SLIGHTLY IMPERFECT
Monopolistic Competition
(Pg 206) Which type of market?
Degree of consumer Information : PERFECT OR IMPERFECT
Oligopoly and Monopoly
