market structures Flashcards
price taker
firm which passively accepts the ruling market price set by market conditions outside it’s control
price marker
a firm processing the power to set the price within the market
perfect competition
form of market structures that requires six conditions to hold:
large number of producers and consumers
perfect information
individual firms can sell and individual consumers can buy as much as they like at the ruling price
no individual firm or consumer can influence the market price
homogeneus product(similar products)
no barriers to entry or exit
pure monopoly
s one there’s only one firm in the market etc mincrosoft
legal monpoloy
over 25% of market share
factors influencing monopoly power
- no of competitors
- barriers to entry
- product diffrentiation
- technology
no of competitors
high number of firms means a lower monopoly power
low number of firms means an increase in monopoly power
barriers to entry
low barriers to entyr in an industry are likely to reduce monopoly power
-high barriers to entry increaes monopoloy power
product differentiation
high product diffrentaition means the product is very different to others , high monopoly power
low product diffrentiation -very similar to others means theres lower monpoly power if prices go up consumers can easily switch to anoother product
technology
increase in technology will decrease monpoly power becuase it is much easier for consumers to shop around to find chepeast firms
monopoly power
Monopoly power is the power a firm has to set its own prices - or to be a “price maker.”
