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How To Classify Markets
Economists classify markets according to conditions that prevail in them
- How many suppliers are there?
- How large is each supplier?
- Do the firms have any influence over price?
- How much competition exists between firms?
- What kind of economic product is involved?
- Are the firms in the market selling exacly the same product or similar ones?
- Is it easy or difficult for new firms to enter the market?
Definition: the nature and degree of competition among firms operating in the same industry.
- Pure competition
- Monopolistic competition
- Conditions for Pure Competition
- Large number of buyers and sellers
- Buyers and sellers deal in identical products
- Each buyer and seller act independently
- Buyers and sellers are well-informed about items for sale
- Buyers and sellers are free to enter into, or conduct, or exit out of the business.
- No separate advertising needed
No influence on price
About this Document
This was originally a lecture done on PowerPoint, but was converted to a pdf. You can still view it like a PowerPoint (without individual bullet points coming in separately) using the FULL SCREEN view mode on Adobe Acrobat (VIEW > Full Screen Mode). Topics covered: Pure Competition, Monopolistic Competition, Oligopoly. (Monopolies are covered in its own lecture)