1. Market Structure Characteristics of the Market Organizational Competitive Features that best describe goods or services market

2. Perfect Competition For a market to be perfectly competitive, three conditions must be met: 1.Both buyers and sellers are price takers – a price taker is a firm or individual who takes the price determined by market supply and demand as given 2.There are no barriers to entry – barriers to entry are social, political, or economic impediments that prevent firms from entering a market 3.Firms’ products are identical – this requirement means that each firm’s output is indistinguishable from any other firm’s output A perfectly competitive market is a market in which economic forces operate unimpeded

3. A Monopolistic Market Barriers to entry into the market prevent competition Monopoly is a market structure in which one firm makes up the entire market There are no close substitutes for the monopolist’s product Barriers to entry can be: Legal Sociological Natural Technological

4. Monopolistic Competition 3.Multiple dimensions of competition make it harder to analyze a specific industry, but these methods of competition follow the same two decision rules as price competition 2.Product differentiation where the goods that are sold aren’t homogenous 1.Many sellers that do not take into account rivals’ reactions 4.Ease of entry of new firms in the long run because there are no significant barriers to entry Monopolistic Competition is a market structure in which there are many firms selling differentiated products and few barriers to entry.

5. Oligopoly An oligopoly is a market structure in which there are only a few firms and firms explicitly take other firms’ likely response into account. In any decision a firm makes, it must take into account the expected reaction of other firms Firms may engage in strategic decision making where each firm takes explicit account of a rival’s expected response to a decision it is making Made up of a small number of firms in an industry