Market (defn)
A market can be a physical place where a product is bought and sold
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Can be used in a collective sense to refer to all buyers and sellers of a particular good or service. EG.
Global market.
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Can be the demand that exists for a particular product or service
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Can also describe the process by which a buyer and seller arrive at a mutually acceptable price and
quantity.
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Market
A market then can be a location, the network of buyers and sellers for a product, the demand for a
product, or a price determination process
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Competitive Market
Is a market in which there are many buyers and many sellers
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Perfectively Competitive
Defined by 2 primary characteristics
The goods being offered for sale are all the same.
1)
There are so many buyers and sellers that no single buyer or seller can influence the market price.
2)
Buyers and sellers in a perfectly competitive market must accept the price the market determines. They
arePRICE TAKERS.
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Examples:Wh e at mark e t
Other Markets
Monopoly -only ones e l l e r, thi s s e l l er s e ts the p ri ce . E. g. Cab l e TV - Roge rs
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Oligopoly -Have a few sellers that do not always compete aggressively. e.g. Airline routes ( to keep
prices competitive and high)
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Monopolistically competitive -it contains many sellers, each offering a slightly different product.
Because the products are not exactly the same the sellers have the ability to set their own price for their
product. E.G. Restaurants.
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Perfect Competition
There are many sellers in this market
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Sellers have no control over price
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The sellers are all price takers
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Price is determined by interaction of demand and supply
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Goods that are sold similar in nature
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No restriction t enter this market
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Marginal revenue curve is flat
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Price = marginal revenue
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e.g. Farmers
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Monopolistic Competition
There are a lot of sellers in this market, not as many as perfect competition
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Sellers have a little control over price
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Products are similar, but can be different in packaging and style
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There are few restrictions for entry
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Competition occurs through advertising
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Price > marginal revenue
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E.g. Restaurants, convenience stores
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Oligopoly Competition
There are a few sellers in the market place, 3-10
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Have a fair amount of control over price
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Products are different in model or style, example is cars
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There are many restrictions in this area by the government
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Competition occurs through advertising
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Demand curve is kinked
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E.g. Car manufacturing, telephone companies
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Monopoly
Supply and Demand
Sunday, March 22, 2009
2:57 PM
Unit 6 - Micro Page 1
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