Four Major Market Structures

Question 1

Complete.

Monopsony – ________
Ex: coffin (burial)

Duopoly – _________

Answer 1

1 buyer; 2 seller

Question 2

_________ are always going to look the same but the price, demand. Revenue, etc. will differ depending on _____________.

Answer 2

Cost curves; market structures

Question 3

No. of sellers: Large
Type of product: (Same) Identical

Answer 3

PURE COMPETITION

Question 4

_____ = MC = MR

Answer 4

ATC

Question 5

Price Strategy: “price-takers”
Entry/ Exit: Easy – no barrier

Answer 5

PURE COMPETITION

Question 6

Output: MR = MC
Efficiency: YES
Economic Profit: 0 – No

Answer 6

PURE COMPETITION

Question 7

Example:
Agricultural products

Answer 7

PURE COMPETITION

Question 8

A large number of sellers that are individually too small to affect the market. (1% of the market)

Answer 8

PURE COMPETITION

Question 9

Free to make decisions without worrying how their competition will react.

Answer 9

PURE COMPETITION

Question 10

Same/ identical/ homogenous products.

Answer 10

PURE COMPETITION

Question 11

Easy to come & go from industry.

Answer 11

PURE COMPETITION

Question 12

No (small) ability to drive prices since everyone else produces.

Answer 12

PURE COMPETITION

Question 13

No. of sellers: Few
Type of product: Identical and differentiated

Answer 13

OLIGOPOLY

Question 14

Products
Question: efficiency
- _________________
- _________________

Answer 14

• Maximizing resources
• Allocating them well

Question 15

Price Strategy: somewhat “price-takers” and/or “price-makers”
Entry/ Exit: RESTRICTIONS

Answer 15

OLIGOPOLY

Question 16

Output: MR = MC
Efficiency: NO
Economic Profit: YES

Answer 16

OLIGOPOLY

Question 17

Example: Gasoline

Answer 17

OLIGOPOLY

Question 18

Pricing strategies:
Collusion and;
Price leadership – One dictating

Answer 18

OLIGOPOLY

Question 19

To follow or not to follow

Answer 19

Kinked Demand curve

Question 20

______________ – depends on the competitors’ decision

Answer 20

Game theory

Question 21

Some barriers (hard entry), but not impossible. Higher costs

Answer 21

OLIGOPOLY

Question 22

Can be identical (ex: OPEC), or differentiated (ex: cars)

Answer 22

OLIGOPOLY

Question 23

Small number of producers Few enough that each producer has a fairly large chunk of the market.

Answer 23

OLIGOPOLY

Question 24

Any individual producer can affect the market.
Everyone’s actions matter.

Answer 24

OLIGOPOLY

Question 25

Producers become mutually interdependent.
What one does, affects the others.

Answer 25

OLIGOPOLY

Question 26

No. of sellers: Many
Type of product: Differentiated

Answer 26

MONOPOLISTIC COMPETITION

Question 27

Price Strategy: somewhat “price-takers”
Entry/ Exit : RESTRICTED

Answer 27

MONOPOLISTIC COMPETITION

Question 28

Output: MR = MC
Efficiency: NO
Economic Profit: YES

Answer 28

MONOPOLISTIC COMPETITION

Question 29

Example:
Mall products

Answer 29

MONOPOLISTIC COMPETITION

Question 30

Still competitive. Lots of producers.

Answer 30

MONOPOLISTIC COMPETITION

Question 31

Highly similar and highly substitutable, but not identical products.

Answer 31

MONOPOLISTIC COMPETITION

Question 32

Small amount of market power. Slight difference.

Answer 32

MONOPOLISTIC COMPETITION

Question 33

Ex: toothbrushes
Brand A’s price increased a little, but I will still buy it. However, if its price increases too much, I will substitute it with another brand.

Answer 33

MONOPOLISTIC COMPETITION

Question 34

No. of sellers: One seller
Type of product: Unique

Answer 34

PURE MONOPOLY

Question 35

Price Strategy: “price-makers”
Entry/ Exit: BLOCKED

Answer 35

PURE MONOPOLY

Question 36

Output: MR = MC
Efficiency: NO
Economic Profit: YES

Answer 36

PURE MONOPOLY

Question 37

Example: Electricity

Answer 37

PURE MONOPOLY

Question 38

Unique/ no substitute products.

Answer 38

PURE MONOPOLY

Question 39

Entry is merely impossible.

Answer 39

PURE MONOPOLY

Question 40

Barrier, high cost, patents/ copyrights.

Answer 40

PURE MONOPOLY

Question 41

Only one producer. Hence, complete market power:

Answer 41

PURE MONOPOLY