Market Structures in Economics

These flashcards cover essential vocabulary related to market structures in economics, summarizing key terms and their definitions for exam preparation.

Market Structure

The classification of different industries based on the degree and nature of competition for services and goods.

Perfect Competition

A market structure with many firms producing identical products where all firms are price takers and can enter or exit the market without cost.

Monopoly

A market structure with only one firm that produces goods with no substitutes and has impossible barriers to entry.

Oligopoly

A market structure characterized by a few dominant firms whose behavior depends on each other, with products that may be homogeneous or differentiated.

Monopolistic Competition

A market structure with many firms whose goods are close substitutes but highly differentiated, allowing relatively easy market entry.

Barriers to Entry

Factors that make it difficult for new firms to enter an industry, including high costs, legal restrictions, and product differentiation.

Patent

A legal document granting exclusive intellectual property rights over a specific invention to encourage innovation.

Franchise

A business model where an operator pays for the right to use the brand and resources of a parent company.

Import Restrictions

Tariff and non-tariff barriers set by a nation to control imports and protect domestic industries.

Collusion

An agreement between firms to cooperate in order to manipulate market prices and gain an unfair advantage.