Market Structure

Question 1

Perfect Competition

Answer 1

A perfectly competitive market is one with a large number of firms, all producing essentially the same product

Question 2

What are the 4 Conditions of Perfect Competition?

Answer 2

1. Many buyers and sellers participate in the market
2. Sellers offer identical products
3. Buyers and Sellers are well informed about products
4. Sellers are able to enter and exit the market freely

Question 3

Monopoly

Answer 3

Forms when barriers prevent firms from entering a market that has a single supplier
- 1 company controls all of the means of production of a certain product
- A single seller in the market
Ex: Public Water Companies

Question 4

Government Monopolies

Answer 4

A monopoly created by the government

Question 5

What are 3 Types of Government Monopolies?

Answer 5

1. Technological Monopolies
2. Franchise and Licensure
3. Industrial Organizations

Question 6

Technological Monopolies

Answer 6

Utilizing patents that gives companies exclusive rights to sell a new good or service for a period of time

Question 7

Franchise and Licensure

Answer 7

Contracts issued by a local authority that gives a single firm the right to sell its good within an exclusive market

Question 8

What are the 4 Market Structures?

Answer 8

1. Perfect Competition
2. Pure Monopolies
3. Monopoly
4. Oligopoly