Name: ________________________________________________________________________________
CHAPTER 7 – Market Structures
Chapter 7 – Market Structures
Perfect Competition

Perfect Competition – also known as __________________________________, large number of firms producing
essentially the _______________________________________ (most _____________________________)

Buyers and sellers are so __________________________________that no
__________________________/_________________________ has any influence over the
______________________________________


Firms are __________________________________________________

Price is determined purely by ___________________________________________
Four Conditions:
1. Many _______________________________________________
2. Goods offered for sale are _______________________________________________________________
3. Buyers and sellers have _________________________________________________________________
4. Sellers are able to ______________________________________________________________________
Examples of Perfect Competition in the “Real World”
-
Commodity - basic good with _____________________________________ from one product to the next with
multiple producers selling ____________________________________________________

_______________________________________

_______________________________________

_______________________________________

_______________________________________

________________________________________

________________________________________

_______________________________________

_______________________________________
Monopoly

Monopoly - when ______________________________________ controls the market of a _____________________
/_______________________________ and can effectively dictate ______________________
(least __________________________________)

___________________ (90s), ________________, _______________________, __________________, etc.

Complete __________________________________________

Government Monopolies – a monopoly intentionally created by the ______________________________________

Patent – gives a company _______________________________ rights to sell a ______________ good or service for
a ___________________________________________________

Copyright – the right to control the _____________________________, ___________________________________,
such as lyrics, ____________________, logos, ________________________, etc.

Government Franchise – the right to sell a good or service within an_______________________________________

License – a government issued right_________________________________________________________________

Price discrimination – dividing customers into groups and charging each customer a
_________________________________________

Market Power – ability to control ________________________and total _________________________________
Monopolistic Competition

Monopolistic Competition – many companies selling ___________________________ products but not
___________________________

Market for __________________________________________
Four Conditions of Monopolistic Competition
1. Many __________________________
2. Few ___________________________________________
3. Slight control over ________________________
4. Differentiated _____________________________ (main difference between perfect and monopolistic competition)
Oligopoly

Oligopoly – a market structure in which a _______________________________ dominate a market; a few of the
largest firms produce at least _______________________ of the output

__________________________ industry, commercial __________________________,
__________________________ industry, cartels, __________________________,
____________________________, etc.

Characteristics

High _________________________________________

Collusion – businesses work together to ________________________________, agreement to
___________________________________________________

Price Fixing – agreement among firms to sell at the ________________________ or very
_____________________________________________

Cartel – a formal organization of producers that
_______________________________________________________ (OPEC)
Chapter 7 Concepts Review
Statement
1. Jane can purchase a share of
Microsoft stock from Smith Barney or
Schwab. There is no difference in the
price of the product.
2. GM, Ford and Chrysler comprise
80% of the market share for
automobiles.
3. It is nearly impossible to compete
with the NFL .
4. In the market for cell phones, there
are a number of different companies
to select from.
5. OPEC controls the world’s supply of
oil.
6. Cilantros offers free meals to
children under 12.
7. Publix uses the slogan, “where
shopping is a pleasure”, to
differentiate their products.
8. Microsoft used its market power to
illegally force companies to not use
Netscape browsers.
Market Structure
Explanation
Market Structures Simulation
Item
Characteristic of the
Number of Firms
Market Structure
Item
Examples in the Real
World
Comparison of Market Structures
Perfect Competition
Monopolistic
Competition
Number of Firms
Variety of Goods
Control Over Prices
Barriers to Entry
Examples
Oligopoly
Monopoly