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
