Market Structures SSEMI4 The student will explain the organization and role of business and analyze the four types of market structures in the U.S. economy. c. Identify the basic characteristics of monopoly, oligopoly, monopolistic competition, and pure competition.

Key Terms Number of Sellers Are there many, few, or one seller(s) of the product? Price Setting Power Can individual firms control pricing? Product Differentiation Difference in products sold by producers? Non-Price Competition Use other methods (than price) to attract customers?

More Key Terms Barriers to Entry: Obstacles to prevent entrance? Long-run Profits: Ability to make economic & accounting profits Economic Profits: Money after explicit and implicit costs Explicit Costs Out of pocket expenses Implicit Costs Opportunity Costs expenses Accounting Profits: Money left over after explicit costs

Pure (Perfect) Competition: # of sellers = many Price setting power = none Product differentiation = none, product is identical

Pure (Perfect) Competition: Non-price competition = None Barriers = None, easy to enter/exit Long Run Profits = None, Goal = short-run profits leave when profits disappear

Monopolistic Competition: Large # buyers/sellers of similar product differentiated by brand, quality, etc. Example: restaurants and retail clothing sellers # of sellers = many Price Setting Power = a little bit

Monopolistic Competition: Product Differentiation = Yes; must differentiate to attract consumers Non-Price Competition = Yes; uses lots of advertising Barriers = None; easy to enter/exit market Long-Run Profits = None; goal =short-run profits leave when the profits disappear

Oligopoly few sellers of a product dominate the market. Example: Airlines, natural gas # of sellers = few Price setting power = price leader-ship = one ↨ price = others follow Product differentiation = Yes or No; identical or differentiated

Oligopoly Non-Price Competition = advertising to attract customers Barriers = Yes, firms = very large produce units at low costs/unit difficult for small firms to compete Long-Run Profits= Yes

Monopoly one seller of product dominating market. Example: electrical companies and cable companies # of sellers = One Price setting power = A lot, Price seeker/maker Product differentiation = No; only one firm

Monopoly Non-Price Competition = Public relations so consumers feel good Barriers = Yes = licenses / patents bar entry ownership of factors of production Long-Run Profits= Yes