Different Market structures |

Question 1

Perfect Competition

Answer 1

Ideal market structure, many sellers, many buyers, identical products, no barriers to entry; total competition.

Question 2

Imperfect Competition

Answer 2

Any market structure except perfect competition

Question 3

Monopolistic competition

Answer 3

Market structure where there are many firms, differentiated products, few barriers to entry

Question 4

Oligopoly

Answer 4

Market structure with few firms and high barriers to entry

Question 5

Ways to identify market structure

Answer 5

1. Count the number of firms
2. Use a concentration ratio
3. By evaluating Barriers to entry
4. By considering importance of economies of scale to the firms

Question 6

Types of barriers to entry

Answer 6

1. Legal barriers
2. Market barriers
3. Cost barriers
4. Physical Barriers
5. Barrier to exit

Question 6

Perfect competition

Answer 6

Large number of buyers and sellers, no individual firm has impact on market, homogenous products, complete freedom of entry into and exit from market all firms and consumers have complete information

Question 6

Oligopoly

Answer 6

Market dominated by few firms whos decisions impact the entire market

Question 7

Price competition

Answer 7

Firms compete on price to attract customers

Question 8

Non-price competition examples

Answer 8

1. Advertising and promotions
2. Product innovation
3. Brand proliferation
4. Market segmentation
5. Process innovation

Question 9

Contestability

Answer 9

Extent to which barriers to entry and exit are expensive

Question 10

Deregulation

Answer 10

When barriers to entry are removed in an industry