1. Types of Market Structures

2. -All of the companies that sell a particular good or service are called a market -Examples: Automobile market, soda market, cable tv market -Ways to classify markets: how many businesses are involved, how much competition exists, how easy it is to enter the market, and the similarity of the products

4. Perfect competition
-Subject only to the laws of supply and demand -Firms have no control over the price they charge -Number of firms is unlimited since there are no barriers to entry -All firms produce the same identical product

5. Perfect competition
-Makes sense in theory, hard to find in reality -Examples: agricultural products -Market for rice, corn, wheat

6. Monopolistic competition
-Each firm makes a product that is slightly different from the others -Many competing producers exist since barriers to entry are low -Each firm has slight control over the prices it charges

7. Monopolistic competition
-Examples: Soap, shampoo, toothpaste, potato chips

8. Oligopoly
-A few large firms control the market since barriers to entry are high -Firms have control over supply and prices -Interdependence is key: each firm’s decisions are affected by what other firms do

9. Oligopoly
-Examples: Market for automobiles, soft drinks, airlines

10. Monopoly
-This type of market only involves one specific firm -The firm has total control over price -Examples: Local electric, gas, and cable companies