1. Market Structures 7.1

2. Decline of laissez-faire As business grew, so did the role gov’t played in it By 1800s, mergers and trusts had changed the nature of competition Today, economists classify markets by the degree of competition in them Four main models

3. Pure/perfect competition Characteristics: –Large # of well- informed, independent buyers and sellers –Identical product being sold –Easy entry/exit into market –Best example : farmer’s market or truck farming

4. Monopolistic competition Same conditions as perfect competition, except that products aren’t identical -product differentiation -nonprice competition Examples : retail stores, restaurants

5. Oligopoly Industry is dominated by a few very large sellers Entry into industry is difficult Behavior is interdependent Think “Big 3” auto, airline, oil companies

6. Monopoly Only one firm in industry Total control over price (no competitors) Entry/exit to market is nearly impossible Does not commonly exist because they are usually illegal Examples : local water supply, utilities