Introduction to Market Structure

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Camille Saranghelo...

Introduction to Market Structure

  1. 1.  market structures are represented by four basic market models › These are theoretical frameworks for existing firms and industries in the real world
  2. 2.  Firms and industries play a vital role in our economy › It is seeking ways of reducing costs of production › Improving the quality of their goods and services
  3. 3.  Satisfaction or interest of the consumers has been ignored due to self-interest of producers or sellers Inherent market imperfections
  4. 4.  The relationship between input (factors of production) and output (goods and services produced by the factors of production)
  5. 5.  refers to the fair allocation of the productive resources like land, capital and management among members of society
  6. 6.  Allocates goods and services through the mechanism of demand and supply › The members of society obtain their goods and services in the market on the basis of their ability and willingness to buy
  7. 7.  there is a need for the government to participate in the allocation function of the market system to protect the interest of the poor
  8. 8.  BASIC MARKET MODELS AND THEIR CHARACTERISTICS DETERMINANTS OF MARKET STRUCTURES PRICE AND OUTPUT DETERMINATION GRAPHS AND TABLES TO SUPPORT THE LAST TOPIC
  9. 9.  Perfect/ pure type a. perfect or pure competition b. pure monopoly Imperfect/ non-pure type a. monopolistic competition b. oligopoly
  10. 10.  Pure Competition › there is a large number of independent sellers offering identical product Monopolistic Competition › Only one seller or producer supplying unique goods and services › One-buyer market situation is known as monopsony
  11. 11.  Monopolistic Competition › There is a relatively large number of small producers or suppliers selling similar but not identical products Oligopoly › Few firms offering standardized or differentiated goods and services › A few buyer market situation is called oligopsony
  12. 12.  Pure Competition › Large number of independent sellers › Products are identical or homogeneous › No single seller and no single buyer can influence the change in market price of a product › The rise fall of market price is due to change in total demand or total supply › There are no significant barriers like legal, financial, or technical requirements

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