Importance of market structure on producers and consumers Flashcards
1
Q
What are the different market structures?
A
- Monopoly
- Duopoly
- Oligopoly
- Monopolistic competition
- Perfect competition (does not exist)
2
Q
What are the characteristics of a monopoly?
A
- ‘One seller’- one large firm that dominates market (over 25% market share)
- Very high barriers to entry/exit
- No competition
- Firm sets price
3
Q
What are the characteristics of a duopoly?
A
- ‘Two seller’- two large firms that the market between them
- High barriers to entry/exit
- Very little competition
- Can influence price but must also differentiate product in some way
4
Q
What are the characteristics of an oligopoly?
A
- ‘Few seller’- a few large firms that dominate market
- Moderately high barriers to entry
- Low competition
- Must have a USP (unique selling point) as any change in price can lead to disadvantages or ‘price wars’ (interdependent)
5
Q
What are the characteristics of monopolistic competition?
A
- Lots of firms where no one dominates the market
- Low barriers to entry
- High competition
- Any rise in price will lead to customers going to a different firm- must differentiate product
6
Q
What are the characteristics of perfect competition?
A
- Unlimited firms (does not exist)
- No barriers to entry- anyone can join
- Extremely high competition
