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Economics — Market Structures

Types of markets and their competitive characteristics

M
market_power_mp 15 terms Dec 31, 2025
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Terms 15

1
Perfect Competition
Many sellers, identical products, price takers, free entry/exit; purely theoretical
2
Monopoly
Single seller controls entire market; sets price; high barriers to entry
3
Oligopoly
Few large firms dominate market; interdependent pricing; e.g. airlines, tech
4
Monopolistic Competition
Many sellers with differentiated products; some pricing power; e.g. restaurants
5
Price Maker
Firm with enough market power to set its own price
6
Price Taker
Firm that must accept the market price; cannot influence it
7
Barriers to Entry
Obstacles preventing new firms from entering a market
8
Economies of Scale
Falling average costs as output increases; advantage for large firms
9
Collusion
Secret agreement between competing firms to fix prices or limit output
10
Cartel
Group of producers cooperating to control supply and prices; e.g. OPEC
11
Antitrust Laws
Laws preventing monopolistic behavior and promoting market competition
12
Deadweight Loss
Loss of economic efficiency when equilibrium is not achieved; caused by monopoly or taxes
13
Profit Maximization
Producing where marginal revenue equals marginal cost (MR = MC)
14
Marginal Cost
Cost of producing one additional unit of output
15
Marginal Revenue
Additional revenue from selling one more unit