The market structure

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The market structure

  1. 1. The Market Structure Economics 1
  2. 2. Important Terms! <ul><li>Marginal Cost-the cost of producing one more unit of a good </li></ul><ul><li>Marginal Revenue-the additional income from selling one more unit of a good; sometimes equal to price </li></ul><ul><li>Total Cost-fixed costs plus variable costs </li></ul><ul><li>Total Revenue-the total amount of money a firm receives by selling goods or services </li></ul>
  3. 3. Perfect Competition <ul><li>Many buyers and seller participate in the market </li></ul><ul><li>Sellers offer identical products </li></ul><ul><li>Buyers and sellers are well informed about products </li></ul><ul><li>Sellers are able to enter and exit the market freely </li></ul>
  4. 4. Many Buyers and Sellers <ul><li>No one should be powerful enough to buy or sell enough goods to control the market </li></ul><ul><li>The market should determine price with the influence from suppliers and consumers </li></ul>
  5. 5. Identical Products <ul><li>If perfect…there should be no differences between products! </li></ul><ul><li>Commodities=a product that is the same no matter who produces it </li></ul><ul><li>Is Mac and Cheese a Commodity?! </li></ul>
  6. 6. Informed People <ul><li>People should be able to find the best deal possible </li></ul><ul><li>This is why we search the internet, newspaper, etc. for the best deal! </li></ul><ul><ul><li>We want to make sure that the effort to find it is worth our time! </li></ul></ul>
  7. 7. Entry and Exit <ul><li>Enter when you can make money </li></ul><ul><li>Leave when you don’t… </li></ul><ul><li>Markets with more firms in competition have lower prices </li></ul>

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