market structures The characteristics of perfect competition Economists classify markets based on now competitive they are. A market structure is an economic model that allows people to examme competition in a certain industry perfect competition is the ideal model, it has 5 characteristics 1. numerous buyers. sellers 2. standardized product: a product identical to other products in the same market 3. freedom to enter/exit markets 4. independent buyers t sellers 5. well informed buyers sellers once these conditions are met, sellers become price takers: a business that can't set its own prices but accepts the market price competition in the real world in the real world, there are'nt any perfect competition. Market structures that lack one of the five conditions needed are called imperfect competition - in corn, there are millions of other farmers so they have to accept the market price characteristics OF a monopoly the least competitive market structure is a monopoly where only one seller offers a product. pure monopolies are rare, but several businesses come close. - A cartel is a formal organization of sellers/producers that agree to set prices and limit output Because a monopoly isn't concerned with competition when setting prices, it is considered a price maker. Price maker is when they set the prices other firms might want to enter an industry, but they face three barriers to entry: - large size - government regulations - special resources/technology similarly, the following are the three characteristics of a monopoly - only one seller - restricted, regulated market -control of prices Types of monopolies A government monopoly exists because the govt. owns the business or only allows one producer. A techologicalmonopoly exists because the firm controls / patents a method, type Of technology, or manufactoring method. A geographical monopoly exists because there aren't other producers in that region.