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Market Structures
Ms.Bryant
11
Economics
12th Grade
11/19/2009

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Term
Homogeneous Product
Definition
products are the same or similar; easily substituted
Term
Heterogeneous Products
Definition
differentiated product; real or perceived differences exist (color, style, quality)
Term
Price Leadership
Definition
action taken by industry leader (i.e., Nike) to raise the price; other large firms follow suit (Put which market structure this is.
Term
Price Taker
Definition
a firm that takes the market price determined by supply and demand
Term
Price Setter
Definition
a firm that has control over the price of the product is sells; no competition.
Term
Anti-trust legislation
Definition
Bills and acts designed to monitor and regulate big business, prevent monopolies.
Term
Pure Competition
Definition

• Example

Agriculture Products

 

• Number of firms

 

MANY

 

• Type of product

 

Homogeneous (same or similar)

 

• Conditions to entry

Free or very easy

 

• Type of price setting behavior

Determined by market

 

• Existence of non-price competition

none 

 

 

 

 

 

 

 

 

 

Term

Monopolistic Competition

Definition

• Example

Tennis Shoes

 

 

• Number of firms

 

MANY

 

 

• Type of product

Differentiated (Heterogeneous)

 

 

• Conditions to entry

Relatively easy

 

 

• Type of price setting behavior

Determined by market and small amount of discretion

 

• Existence of non-price competition

Some, especially by advertising

 

 

 

 

Term
Pure Oligopoly
Definition

 • Example

Steel; mail delivery service (fed-ex)

 

 

• Number of firms

FEW

 

• Type of product

Homogeneous (same or similar)

 

 

• Conditions to entry

Substantial Barriers

 

• Type of price setting behavior

 

Determined by market & considerable discretion; possible price leadership

 

• Existence of non-price competition

Some; such as on-time delivery

 

 

 

 

 

Term
Differentiated Oligopoly
Definition

• Example

 

• Number of firms

FEW

 

  • • Type of product
  • Differentiated (Heterogonous)

     

    • Conditions to entry

    Substantial barriers

     

    • Type of price setting behavior

    Determined by market & considerable discretion; possible price leadership

     

    • Existence of non-price competition

    extensive

     

     

     

     

     

     

     

     

    Cars 

    Term
    Monopoly
    Definition

     • Example

    Public Utility

     

    • Number of firms

    ONE

     

    Unique- only one of its kind available

     

    • Conditions to entry

    Can be blocked

     

    • Type of price setting behavior

     

    Establishes prices at most profitable level possible

     

    • Existence of non-price competition

    Advertising of firms "image"

     

     

     

     

     

    • Type of product

     

     

     

     

     

     

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