Market Structures and Competition

Pure Competition

is a theoretical market structure with three necessary conditions: Very large numbers of buyers and sellers, identical products and freedom of entry and exit.

Market Structure

is a classification that describes the nature and degree of competition among firms in the same industry.

Competition:

is a theoretical market structure with three necessary conditions.

Monopolistic Competition

a market structure that has all of the conditions of pure competition except for identical products.

Because a monopolistic competitor faces competition from a large number of firms in its industry, it must somehow convince consumers that its products are better than the products produced by other firms.

Natural Monopoly

A natural monopoly is one in which a single firm can produce the product more cheaply than any number of competing firms could.

Geographic Monopoly

A geographic monopoly is a monopoly based on the absence of other sellers in a certain geographic area.

Technological Monopoly

A technological monopoly is one based on ownership or control of a manufacturing method, process, or other scientific method.

Government Monopoly

A government monopoly is a monopoly owned and operated by the government.

Lesson 2

• Not enough competition.
• Not enough information.
• Resources that can't, or won't, move.
• Too few Public goods
• Externalities or Spillover Effects

Spillover effects, or uncompensated side effects that either benefit or harm a third party not involved in the activity that cause it.

Cost-benefit analysis

Calculation that compares the cost of an action to its benefit.

Lesson 3

Trusts: illegal combinations of corporations or companies organized to suppress competition

Restrained: Limited the activity or growth of.

Price discrimination: practice of charging different customers different prices for the same product

Cease and desist order: ruling requiring a company to stop an unfair business practice that reduces or limits competition.

Economies of scale: a situation in which the average cost of production falls as the firm gets larger.

Public Disclosure: requirement forcing a business to reveal information about its products or its operations to the public.

Mortgage: legal document that pledges ownership of a home to a lender as security for repayment of borrowed money.

Foreclosure: process in which a lender reclaims the property due to a lack of payment by the borrower