Market Structures Flashcards
(17 cards)
What is a Perfect Market? Give the Definition
A Perfect market is a market where no single supplier can manipulate the price.
What are the Characteristics of a Perfect Market?
- There is a large number of buyers and sellers
- No individual can influence prices
- Homogeneous Products - Products are identical across brands
- There is free entry and exit with no restrictions or state control
- There is perfect information where both sellers and buyers know market conditions
How can you make products more price inelastic?
- Marketing and advertising
- Product placement and packaging
- customer service and longer opening hours
- discounts and special offers
What is an Imperfect Market?
give the definition
An imperfect market is one where a supplier can influence the price to their advantage
What are the characteristics of an imperfect market?
- Few big suppliers with limited competition
- unique products with no substitutes
- Restricted entry often caused by high cost and regulations
- Incomplete knowledge of market conditions
What are the three types of imperfect markets?
- Monopoly
- Oligopoly
- Monopolistic
Give short explanation of each of the imperfect markets
Monopoly = One producer dominates
Oligopoly = a few producers dominate
Monopolistic = Producers hold strong positions through branding
Give an example of a perfect competition
agricultural markets, e.g. maize and wheat
What is a Monopolistic market?
A market where many firms sell similar but slightly different products
What are the key characteristics of a monopolistic market?
- many small to medium sized firms
- products are differentiated by branding and packaging
- Firms have some control over pricing
- Low barriers to entry
- Advertising and brand loyalty are important
Give examples of monopolistic markets
Restaurants, clothing stores, beauty salon
What is an Oligopoly market?
A market dominated by a few large firms, where each is affected by the actions of the others.
What are the key characteristics of an oligopoly market?
- Few large firms dominate
- high barriers to entry
- Products may be identical or differentiated
- Firms are interdependent - decisions affect each other
- Non-price competition is common
Give examples of oligopoly markets
Vodacom, MTN, Airline industry, Automobile manufactures, Oil companies
What is a Monopoly market?
A market structure where a single firm controls the entire supply of a product with no close substitutes
What are the key characteristics of a monopoly market?
- Only one supplier
- unique products with no close substitute
- high or complete barriers to entry
- Firm has complete control over price
- Often legally protected
Give an example of a monopoly market
Eskom, Transnet, South African post office
