CHAPTER 8
FOUR MARKET STRUCTURES
1.
Monopoly-
One seller
2.
Oligopoly-
Fewer sellers
3.
Monopolistic
Competition: Many Sellers
4.
Perfect
Competition – Very Many sellers
PERFECT COMPETITION
When
stores sell the same products. Example: Stores selling T-Shirts on the coast of
Florida.
5 Conditions Of Perfect
Competition
1.
Large market-
You have a lot of sellers (producers) and buyers (consumers).
Tons of stores sell T-shirts.
2.
Similar Product-
Items are near Identical. Shirts
are pretty much the same.
3.
Easy Entry and Exit
Competitors can move freely in and out of business, without
restrictions and without start up costs. You can buy t-shirts on the
Internet…cheaply, easy to start your own store
4.
Easily obtainable
Information
Info about products and costs are
easy to obtain. Internet
5.
No control over price
Supply and Demand controls the
market, not a single seller or buyer.
IMPERFECT COMPETITION
Exist when any individual or group
buys or sells a good or service in amounts large enough to affect price. EXAMPLES: Monopoly, Oligopoly
1.
PURE
MONOPOLY
Is the most extreme form of imperfect competition. Example:
MLGW
Pure Monopoly has Four Characteristics
1.
Single seller
2.
No substitutes
3.
No Entry
Barriers
of entry- obstacles prevent others from entering the market
1.
Start up cost
2.
Government Restrictions
3.
Control of Resources
4.
Consumer Loyalty
4.
Control over prices
Cartel
·
A group of businesses that
join together to dominate a market.
·
Businesses get together and try to
control the price of what they are marketing. It is illegal in the U.S., but, not in other countries.
·
It is called COLLUSION: When companies work together to control prices.
COLLUSION IS ILLEGAL IN THE UNITED STATES.
o EXAMPLE OF A CARTEL:
§ OPEC- Organization of Petroleum
Exporting Countries
§ 5 original
members of OPEC:
Saudi Arabia,
Iran, Iraq, Kuwait, Venezuela
1973 OPEC
Cut us off from oil.
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