Basic Market Models in Economics

Flashcards reviewing basic concepts of market models in economics.

Market

A market is composed of buyers and sellers of a specific good or service.

Model

A model is a representation of a theory that explains market behaviors.

Theory

A formal explanation of some observed phenomenon that has been verified to some degree.

Perfect Competition

A market structure where there are many firms competing with identical products and easy market entry and exit.

Monopolistic Competition

A market structure characterized by many firms selling differentiated products, allowing for some market power.

Oligopoly

A market structure where a few firms dominate the market, leading to limited competition.

Monopoly

A market structure where a single firm controls the entire market supply of a good or service.

Barriers to Entry

Obstacles that make it difficult for new firms to enter the market.

Market Power

The ability of a firm to influence the price of a good or service in the market.

Product Characteristics

Features of a product that may differentiate it from other products in the market.