chapter 7 - market structure

Question 1

firm vs industry

Answer 1

firm: organisation that produces goods and services. all producers are called firms

industry: group of firms that sells a well defined product or closely related set of products

Question 2

meaning of market structure

Answer 2

classification system for the key characteristics of a market incuding no of irms, similarity of the products and ease of entry into and exit from the market

Question 3

4 market structures

Answer 3

perfect/pure competition
oligopoly
monopolistic competition
monopoly

Question 4

perfect competiton

Answer 4

many small firms
identical products
freedom of entry and exit (no barriers to entry)
perfect knowledge
long run: only normal profit

Question 5

monopoly

Answer 5

single firm
selling a unique product
very strong barriers to entry
long run: normal profit/economic profit

Question 6

monopolistic competition

Answer 6

large number of relatively small firms
sells differentiated products
engage in non-price competition
minimal barriers to entry and exit
long run: only normal profit

Question 7

oligopoly

Answer 7

small number of relatively large firms
homogeneous or differentiated products
barriers to entry
long run: normal or economic profit