



Perfect Competition – A market structure in which a large number of
firms all produce the same product. Pg. 151
Monopoly – A market dominated by a single seller. Pg. 156
Monopolistic Competition – A market structure in which many companies
sell products that are similar not identical. Pg. 166
Oligopoly – A market structure in which a few large firms dominate a
market.
Perfect
Competition
Monopoly(Pure)
Characteristics
Characteristics
Only One Sellerbuyers
– A single
business
controls
1.Numerous
and
sellers
the supply of a product that has no close
2.
Standardized product
substitutes
3.
Freedom
to –enter
and exit
Control
of Prices
Monopolies
act as price
makers because they sell products that
market
have
no close substitutes
they
face no
4.
Independent
buyersand
and
sellers
competition
5.Well-Informed
buyers
sellers
Restricted, Regulated
Marketand
– Government
regulations or other barriers to entry keep
other firms out of the market.
Monopoly Characteristics
Market Structure
Def. A market
structure in
ethnic groups mixed to form multi-ethnic
which a large
mestizos—Native American and European descent
mulattoes—African and “other” descent
number of firms
all produce Pandemic
the – epidemic that spreads over a large area
-loss of indigenous life;
same product
Loss of Local Culture
-Westernization of Amerindians
-language changes - Spanish & Portuguese
-diffusion and power of Catholicism
Standard of living on a
Only One Seller – A single business controls
the supply of a product that has no close
substitutes
Control of Prices – Monopolies act as price
makers because they sell products that
have no close substitutes and they face no
competition
Restricted, Regulated Market – Government
regulations or other barriers to entry keep
other firms out of the market.
global platform increased.
Def. A market
structure in
which a large
number of firms
all produce the
same product
Ex. Market
For strawberries
Very competitive
Market Structure
Perfect Competition
Monopolistic Competition
Oligopoly
Monopoly
Def. A market
dominated by a
single seller
Ex. Electric
Company
Not Competitive
Market Structure
Perfect Competition
Monopolistic Competition
Oligopoly
Monopoly
Def. A market
dominated by a
few large
profitable firms
Ex. Market for
Air travel
Not Very
Competitive
Market Structure
Perfect Competition
Monopolistic Competition
Oligopoly
Monopoly
Ex. Gas Station
Def. Many
companies compete
in an open market
to sell products that
are similar but not
identical
Competitive
Market Structure
Perfect Competition
Monopolistic Competition
Oligopoly
Monopoly
 All
of the following are characteristics
of pure competition EXCEPT —
 A large number of well-informed buyers and
sellers
 B no buyers or sellers large enough to
influence price
 C more buyers or sellers easily enter the
market
 D barriers to buyers and sellers entering the
market
 One
seller
 Complete barriers to market entry
 No product differentiation
 The
list above describes characteristics of
which of the following?
 F pure competition
 G monopolistic competition
 H oligopoly
 J monopoly
A.
Large number of firms all
producing the same product
B.
Assumes that the market is in
equilibrium and all firms sell
the product at the same price
A.
B.
C.
D.
Many buyers and sellers
Sellers offer essentially the
same product
Buyers and sellers are well
informed about products
Sellers can enter/ exit the
market freely- No Barriers
Commodity-
product that is the
same regardless of who makes it
or sells
Identical products are key- For
one reason, buyers will not pay
extra for one particular
company’s goods
Prices in a P.C.- they are the
lowest sustainable price possible
A. Start
up cost
B. Technology
 Why
they exist- competition would
drive down the price and companies
could not survive that
 Advantage- unwasted resources and
gov’t can regulate prices
 Government’s role- regulating
prices and can demand what
services are to be provided
Effect
of a monopolist’s
price increase- it will
generally sell less
How
a monopolist
maximizes profit- tries to
get an output that generally
sustains; revenue minus costs
Barriers
to entry- completethere are no other companies
entering the market
Variety of goods- none
Number of firms- one
Control over pricing- complete
(only through gov’t regulation)
Chapter 7.3/ 7.4
 Defining
A.
B.
C.
D.
Conditions
Many firms
Sell a variety of goods
Barriers to entry tends to be low but the
start up can be expensive
Slight control over price; they can raise or
lower the price because their product is a
little different
A.
Fierce competition
B.
New firms willing to enter the
market

Consumer advantage- wide
variety of goods at a fairly
reasonable cost
1. Physical
characteristics
2. Location
3. Service level
4. Advertising, image,
or status
Market
dominated by a few
profitable firms
Characteristics:
A. Few competitors
B. Very high start up cost (high
barrier)
C. Some variety of goods
A.
Collusionagreement
among
members of
oligopoly to
set prices and
production
levels (price
fixing)
B.
Cartel- a
formal
organization
of producers
to
coordinate
prices and
production
(stronger
than
collusion)
 Both
are illegal in the United States.