chapter 21- types of markets
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11 Terms
what is market structure
the characteristics of a market that determine the level of competition between firms
what is a competitive market
a market with a relatively large number of firms competing with one another
how does the number of firms affect competition
more firms, greater competition, firms have less ability to control price
how can competition affect consumers
lower prices, better quality, greater choice, more innovation
what is market power
the ability of a firm to influence the price or conditions in a market
what is a monopoly
market dominated by one firm
what is monopoly power
the ability of a dominant firm to influence price and market conditions because of limited competitions
what can create barriers to entry
high start up costs, economies of scale, legal restrictions, patent
disadvantages of monopoly
higher price, less consumer choice, less pressure to improve quality, abuse of monopoly power
why can a monopoly have a lower average cost
large scale of production can create economies of scale
why might government regulate monopolies
to prevent abuse of monopoly power and protect consumers