Market structures refer to the different types of organizational arrangements or conditions under which firms operate in a market. They determine the level of competition, pricing strategies, and entry barriers within an industry.
Think of market structures as different types of playgrounds. Some playgrounds have many kids playing together (competitive markets), while others have only a few kids (oligopoly). Each type of playground has its own rules and dynamics that affect how the kids interact with each other.
Perfect Competition: Perfect competition is a market structure characterized by many small firms selling identical products, easy entry and exit, perfect information, and no individual firm's actions affecting the overall market price.
Monopolistic Competition: Monopolistic competition is a market structure with many firms selling similar but differentiated products. Each firm has some control over its price due to product differentiation.
Oligopoly: Oligopoly is a market structure dominated by a few large firms that have significant control over prices and can influence each other's decisions.
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