Market Structure and Competition

Important Vocabulary

Market share: A company's sales expressed as a percentage of the total market
Promotions: Short-term tactics designed to stimulate stronger sales of a product
Monopoly: The situation in which there is only one seller of a product
Competitors: Companies offering similar goods or services to the same set of customers
Slogan: A short and easily memorized phrase used in advertising
Market segmentation: The division of a market into submarkets according to the needs or buying habits of different groups of potential customers
Niche: A small and specific market segment
Differential advantage: A factor that makes you superior to competitors in a certain respect
Turnover: A business's total sales revenue
Recession: A period during which an economy is working below its potential

Matching up the Words With the Definitions Below

Perfect competition exists when products are homogenous, and there are a great many firms too small to have any influence on the market price, and firms can easily enter and exit the industry.
A monopoly is a market in a particular product in which a single producer can fix an artificial price.
Monopsony is the situation in which there is only one buyer.
A natural monopoly is an industry in which the efficient existence of more than one producer is impossible; examples include public utilities such as water, gas, and electricity, where it would be inefficient to have several competing companies laying their own networks of pipes or cables.
Monopolistic competition exists when many producers of slightly differentiated products can sell them at well above the marginal cost.
An oligopoly is a concentrated market dominated by a few large suppliers. This is very frequent in manufacturing because of economies of scale and the cost barriers of entering an industry.
Economies of scale are factors that cause the average cost of producing something to fall as output increases.
Barriers to entry are economic or technical factors that make it difficult or impossible for firms to enter a market or compete with existing suppliers.
A dominant-firm oligopoly is one in which a market leader can indicate its preferred price to smaller competitors.
A cartel is a group of producers or sellers who fix prices and quantities to avoid competition and increase profits. This is illegal in many countries, most notably the USA.