A New House

In: Business and Management

Submitted By Lewis
Words 1074
Pages 5
There are three market structures that individually play a role in the economy. The competitive market is a market with many buyers and sellers trading identical products so that each buyer and seller is a price taker. The monopoly is a market structure in which many firms sell products that are similar but not identical. The Oligopoly market is a market structure in which only a few sellers offer similar or identical products. Each of these markets has different characteristics, play different roles in the economy and have a different price determination. The competitive market, which is also known as the perfectly competitive market has two characteristics: (1) There are many buyers and sellers in the market and (2) the products offered are by many different sellers but the products are the same. There is also another condition, considered to be a characteristic: firms can freely enter or exit the competitive market. The result to these conditions; and the actions of any single buyer or seller in the market has a negligible impact on the market price. The buyers and sellers in the competitive market accept the market price as given. An individual consumer cannot change the price of the product nor influence the price or market structure of the product. Each seller has limited control over the price because there are many other sellers offering the same identical product. Sellers can sell as much as they want at the marketed price, but if the price was increased then buyers could purchase the products from other competitors. Buyers and seller in a competitive market must accept the price the market determines. A firm’s goal in the competitive market is to maximize profit (total revenue minus total cost). In a competitive market the sellers accepts the price given by market conditions , the price of the product does not depend on the quantity of…...

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