Four Major Market Structures Flashcards
Complete.
Monopsony – ________
Ex: coffin (burial)
Duopoly – _________
1 buyer; 2 seller
_________ are always going to look the same but the price, demand. Revenue, etc. will differ depending on _____________.
Cost curves; market structures
No. of sellers: Large
Type of product: (Same) Identical
PURE COMPETITION
_____ = MC = MR
ATC
Price Strategy: “price-takers”
Entry/ Exit: Easy – no barrier
PURE COMPETITION
Output: MR = MC
Efficiency: YES
Economic Profit: 0 – No
PURE COMPETITION
Example:
Agricultural products
PURE COMPETITION
A large number of sellers that are individually too small to affect the market. (1% of the market)
PURE COMPETITION
Free to make decisions without worrying how their competition will react.
PURE COMPETITION
Same/ identical/ homogenous products.
PURE COMPETITION
Easy to come & go from industry.
PURE COMPETITION
No (small) ability to drive prices since everyone else produces.
PURE COMPETITION
No. of sellers: Few
Type of product: Identical and differentiated
OLIGOPOLY
Products
Question: efficiency
- _________________
- _________________
- Maximizing resources
- Allocating them well
Price Strategy: somewhat “price-takers” and/or “price-makers”
Entry/ Exit: RESTRICTIONS
OLIGOPOLY
Output: MR = MC
Efficiency: NO
Economic Profit: YES
OLIGOPOLY
Example: Gasoline
OLIGOPOLY
Pricing strategies:
Collusion and;
Price leadership – One dictating
OLIGOPOLY
To follow or not to follow
Kinked Demand curve
______________ – depends on the competitors’ decision
Game theory
Some barriers (hard entry), but not impossible. Higher costs
OLIGOPOLY
Can be identical (ex: OPEC), or differentiated (ex: cars)
OLIGOPOLY
Small number of producers Few enough that each producer has a fairly large chunk of the market.
OLIGOPOLY
Any individual producer can affect the market.
Everyone’s actions matter.
OLIGOPOLY
Producers become mutually interdependent.
What one does, affects the others.
OLIGOPOLY
No. of sellers: Many
Type of product: Differentiated
MONOPOLISTIC COMPETITION
Price Strategy: somewhat “price-takers”
Entry/ Exit : RESTRICTED
MONOPOLISTIC COMPETITION
Output: MR = MC
Efficiency: NO
Economic Profit: YES
MONOPOLISTIC COMPETITION
Example:
Mall products
MONOPOLISTIC COMPETITION
Still competitive. Lots of producers.
MONOPOLISTIC COMPETITION
Highly similar and highly substitutable, but not identical products.
MONOPOLISTIC COMPETITION
Small amount of market power. Slight difference.
MONOPOLISTIC COMPETITION
Ex: toothbrushes
Brand A’s price increased a little, but I will still buy it. However, if its price increases too much, I will substitute it with another brand.
MONOPOLISTIC COMPETITION
No. of sellers: One seller
Type of product: Unique
PURE MONOPOLY
Price Strategy: “price-makers”
Entry/ Exit: BLOCKED
PURE MONOPOLY
Output: MR = MC
Efficiency: NO
Economic Profit: YES
PURE MONOPOLY
Example: Electricity
PURE MONOPOLY
Unique/ no substitute products.
PURE MONOPOLY
Entry is merely impossible.
PURE MONOPOLY
Barrier, high cost, patents/ copyrights.
PURE MONOPOLY
Only one producer. Hence, complete market power:
PURE MONOPOLY
