What is a market structure? Market structure is defined as the organizational characteristics of a market. The focus on the characteristics which have an affect on the nature of competition pricing is crucial to the success of an organization. For this paper, I am a newly hired consultant, hired by the mayor in my local town, I have been asked to look at the various market structures. My role is to provide analysis and answers to some important questions that will help the mayor to better understand the structures of many of the businesses in my city. I have been asked to describe each market structure which include perfect competition, monopolistic competition, oligopoly, and monopoly along with discussing two of the market characteristics of each market structure.
Next, I will identify one real-life example of a market structure in my local city and relate the example to each of the characteristics of the market, mentioned above. I will describe how high entry barriers in each market will influence long-run profitability of the firms while explaining the competitive pressures that are present in markets with high barriers to entry. I will also explain the price elasticity of demand in each market structure and its effect on pricing of its products in each market. Finally, I will describe how the role of the government affects each market structure's ability to price its products and to discuss the effect of international trade on each market.
Market structures and the functions regarding price play a huge role in the market system in “allocating scarce resources” (Amacher, R., & Pate, J., 2013)and figuring out the base of economics while analyzing the functions of prices in order to inform, motivate, and direct firms as well as consumers. Market prices include a huge area of information for consumers and producers in the decision making process. Consumers care about the market price. They do not pay attention to the...