The meaning of market structure and the factors determining it.
Explanation of Solution
The term market structure refers to a system in which all the firms and customers in the market deals with each other and engage in some economic activities. All the firms sell their products in the market on a particular price. The products can be homogenous or heterogeneous in nature. The consumers buy these goods from the sellers in the market.
The factors which determine the market structure of a particular industry are as follows:
(a) Number of firms in the industry- In some market, the number of firms can be very large and in some market it can be very limited or in some market there is only one firm operating in the market.
(b) Number of buyers in the industry- Just like the number of firms in the industry can vary; the number of buyers can also vary. In some markets the numbers of buyers are huge and in some markets the buyers are as low as only one buyer.
(c) Type of products- There can be different types of products in the market; they can be homogenous or heterogeneous in nature.
(d) Restrictions on the entry and exit of the firms- Some market structure allows free entry and exit of firms while other have no or limited entry and exit of firms.
(e) Level of competition- The different market structure has different degrees of competition. In some market structure, there is high degree of competition while other has low or zero level of competition.
Introduction: Not Required.
Want to see more full solutions like this?
- Business Name: Industry: Market structure (4 market structure one company each): Market Condition: Price competition: Conclusion (choose what market structure applicable to you): Give 4 businesses and identify the industry they are in, market structure, market condition, price competition and conclusion.arrow_forwardOur topic is Market Structure. Please help to explain if this business is likely to be more or less profitable than a large agricultural operation? Thanksarrow_forward5. Iowa farmers can choose from five different manufacturers of farm implement equipment. Two of these manufacturers account for more than 80 percent of all the farm equipment sold in Iowa. These two manufacturers produce very similar equipment. Whenever one manufacturer has a sale, offers rebates, or offers special financing, the other manufacturer quickly follows with a similar program. Competitive Situation: Explanation:arrow_forward
- topic : Industry equilibrium Question : What determines the number of firms in an industry (a) in the short run, (b) in the long run.arrow_forward48. Whenever there is an improvement in the technology, the supply of the products using that technology will__________. a. Decrease b. None of these. c. Remain the same d. Increasearrow_forward1. Demonstrate an understanding of the coordinate system by using it to outline the relationship between economic variables. 2. What is marketing? 3. Explain the concepts of value chain and supply chain?arrow_forward
- Many films in the United States file for bankruptcy every year, yet they still continue operating. Why would they do this instead of completely shutting down?arrow_forwardTopic: Market Structure 1.) Why Perfect Competition Usually Does Not Happen? 2.) Why is perfect competition is desirable ?arrow_forwardEconomics 1. Explain how firms that compete in the four different market structures determine profitability. Use specific examples please helparrow_forward
- Multiple choice - microeconomics 39) A profit-maximizing firm in a competitive market produces small rubber balls. When the market price for small rubber balls falls below the minimum of its average total cost but still lies above the minimum of average variable cost, what happens to the firm? A. It will experience losses, but it will continue to produce rubber balls. B. It will be earning only accounting profits. C. It will be earning both economic and accounting profits. D. It will shut down. 38)arrow_forward10- A perfect competition market structure means: a. a large number of buyers & sellers b. working together to set prices c. difficulty entering & exiting the market d. little information is available to buyersarrow_forward56. Agriculture in india is mostly characterized by perfectly competitive market why?arrow_forward
- Principles of Economics 2eEconomicsISBN:9781947172364Author:Steven A. Greenlaw; David ShapiroPublisher:OpenStax