Production - Competition and Markets Market structure all...

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Competition and Markets Market structure: all of the features that may affect the behavior and performance of the firms in a market (e.g. # of firms, types of products). A. The less power an individual firm has to influence the market in which it sells its product, the more competitive is that market. B. Competitive Behavior; the amount that firms actively vie with one another. C. 4 Basic Market Structures: 1. Competitive Markets 2. Monopoly 3. Monopolistic Competition 4. Oligopoly
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Competitive Markets I. Characteristics of a Competitive Market A. Basic Characteristics 1. Homogeneous Production – firms sell the same type of product 2. Buyers know the price and nature of the product. 3. Any one firm’s output is small relative to industry output. There are large number of sellers and buyers. → Firms are price takers; when they alter output, it does not affect the market price. 4. There exists free entry and exit – existing firms cannot block the entry of new firms.
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