Market Structure Essay

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Market Structures Tina McClintock Principles of Microeconomics ECO 204 Instructor 12/21/2014 There are four types of market structures that impact the market differently; Perfect competition, monopolistic competition, oligopoly, and monopoly. There are major differences between these market structures. Some are easy to enter while others have high barriers to entry. Within the market structures that have high barriers to enter, there is a lot of pressure for competition. Also, price elasticity differs in each market structure. Sometimes, market structures need to be controlled and monitored by the government. This is to ensure fair prices and to keep the market stable. Also, there are a lot of restrictions that have to be taken into account with international trade. Firms within perfect competition must contain six main characteristics. There are a large number of sellers. This means that no single seller can affect the price of the product. There are a large number of buyers. This means that no buyer has any power in the market. Firms produce a homogeneous product. A homogeneous product of one firm has no differences from that product produced by another firm. So the product that is being produced by one firm is the same as the product being produced by the other firms. Because there are no differences between products, the are no preferences by the buyers. There is free entry and exit to the market. This means anyone who wants to try to sell the product may due so. Anyone who wants to leave the market may also do so with no consequences. There is perfect knowledge. This means that all buyers and sellers have been perfectly informed of all information regarding the product. Workers and resources can easily move in and out of the industry. Everything is interchangeable (Amacher & Pate, 2013). This market structure is

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