University:
Indiana University South Bend
Course:
BUS-A 201 | Introduction to Financial Accounting
Academic year:

2023
Views:

328

Pages:

1
Author:

Rose G

market structuresThe characteristics of perfect competitionEconomists classify markets based on now competitive they are. A marketstructure is an economic model that allows people to examme competitionin a certain industryperfect competition is the ideal model, it has 5 characteristics1. numerous buyers. sellers2. standardized product: a product identical to other products in the samemarket3. freedom to enter/exit markets4. independent buyers t sellers5. well informed buyers sellersonce these conditions are met, sellers become price takers: a business thatcan't set its own prices but accepts the market pricecompetition in the real worldin the real world, there are'nt any perfect competition. Market structures thatlack one of the five conditions needed are called imperfect competition- in corn, there are millions of other farmers so they have to accept the marketpricecharacteristics OF a monopolythe least competitive market structure is a monopoly where only one selleroffers a product. pure monopolies are rare, but several businesses come close.- A cartel is a formal organization of sellers/producers that agree to set prices andlimit outputBecause a monopoly isn't concerned with competition when setting prices, it isconsidered a price maker. Price maker is when they set the pricesother firms might want to enter an industry, but they face three barriers toentry:- large size- government regulations- special resources/technologysimilarly, the following are the three characteristics of a monopoly- only one seller- restricted, regulated market-control of pricesTypes of monopoliesA government monopoly exists because the govt. owns the business or only allowsone producer. A techologicalmonopoly exists because the firm controls / patentsa method, type Of technology, or manufactoring method. A geographical monopolyexists because there aren't other producers in that region.