Eco 204 Week 5 Research Paper
Week 5 Final Paper
Derrick Grant
ECO 204
Instructor: Felix Telado
5/03/2015
Introduction:
There are four different model types which are referred to as market structures and consist of sellers and buyers, all of which drive our economy and workforce here in America and around the world. Describe each market structure discussed in the course (perfect competition, monopolistic competition, oligopoly, and monopoly) and discuss two of the market characteristics of each market structure.
Perfect competition is the situation in a market (based on six assumptions), (1) where the elements of a monopoly are non-existent, (2) consisting of numerous buyers and sellers, (3) the market price of commodities are beyond the control of individual sellers and buyers, (4) perfectly competitive firms produce homogeneous products, (5) there is free entry into the market and free exit out of the market, and lastly (6) there is perfect knowledge. If these six assumptions are met, the market will be perfectly competitive. Monopolistic competition describes a marketplace consisting of a great number of sellers offering a differentiated product, which …show more content…
Perfect Competition: Zero barriers to entry.
2. Monopolistic Competition: Low barriers to entry.
3. Oligopoly: High barriers to entry. Economies of scale, which basically means that any of these could be necessary to enter an industry; natural, artificial, and governmental barriers.
4. Monopoly: Very High to Absolute barriers to entry. The government regulates their prices and output levels, while also regulating foreign firms by putting in place, tariffs and quotas, which serves as an artificial barrier to entry by increasing the price on foreign goods. With high entry barriers, the federal, local, and state governments jointly may restrict entry, while ensuring protection of certain market positions already in place.
Explain the competitive pressures that are present in markets with high barriers to
Derrick Grant
ECO 204
Instructor: Felix Telado
5/03/2015
Introduction:
There are four different model types which are referred to as market structures and consist of sellers and buyers, all of which drive our economy and workforce here in America and around the world. Describe each market structure discussed in the course (perfect competition, monopolistic competition, oligopoly, and monopoly) and discuss two of the market characteristics of each market structure.
Perfect competition is the situation in a market (based on six assumptions), (1) where the elements of a monopoly are non-existent, (2) consisting of numerous buyers and sellers, (3) the market price of commodities are beyond the control of individual sellers and buyers, (4) perfectly competitive firms produce homogeneous products, (5) there is free entry into the market and free exit out of the market, and lastly (6) there is perfect knowledge. If these six assumptions are met, the market will be perfectly competitive. Monopolistic competition describes a marketplace consisting of a great number of sellers offering a differentiated product, which …show more content…
Perfect Competition: Zero barriers to entry.
2. Monopolistic Competition: Low barriers to entry.
3. Oligopoly: High barriers to entry. Economies of scale, which basically means that any of these could be necessary to enter an industry; natural, artificial, and governmental barriers.
4. Monopoly: Very High to Absolute barriers to entry. The government regulates their prices and output levels, while also regulating foreign firms by putting in place, tariffs and quotas, which serves as an artificial barrier to entry by increasing the price on foreign goods. With high entry barriers, the federal, local, and state governments jointly may restrict entry, while ensuring protection of certain market positions already in place.
Explain the competitive pressures that are present in markets with high barriers to