Market and its types

1. Market and its types
Prepared By : Ketaki Pattani
Enroll. No. : 130210107039
College : GEC , Bhavnagar

2. What is a Market?
• A market is any arrangement through which
buyers & sellers of specific goods and services
interact to possibly facilitate an exchange.
• Markets reduce transportation costs
– Costs of making a transportation other than the
price of the good or service

3. Competition:
• Competition creates choices for consumers
and keeps prices down.
• This ensures firms remain accountable to
consumers.
• Price is an obvious area of competition.
• Non-Price competition involves changing
anything but price.

4. Market Structures
• Market characteristics determine the economic
environment in which a firm operates. Its
decisions regarding the price as well as output.
• The various factors that determine the market
structure are:
– The number of firms available
– The control of a firm over price
– How customers can enter or leave a market
– The amount of non-price competition
– Similarity of products or substitutes available

5. Types of Market :
The four basic market structures are perfect competition,
monopoly, oligopoly, monopolistic competition.

6. Perfect Competition
• Large number of relatively small firms.
• Undifferentiated product.
• No barriers to entry.
• Entry and exit is relatively easy.
• Customers are totally aware about the market.
• Equality of prices.
• Individuals have no control over market supply.
• They are the price takers.
• Little non-price competition.

7. Curves in Perfect Competition:

8. Monopoly
• Single firm.
• Firm itself drives an industry.
• Produces product with no close substitutes.
• Protected by a barrier to entry.
• The firm is considered price maker at times.
• Entry and exit is not that simple as in
perfect competition.

9. Curve in Monopoly:

10. Monopolistic Competition
• Real world concept.
• Large number of relatively small firms.
• Similar products.
• Individuals may not be completely aware
about the market.
• Firms face down sloing demand curves
• Profit maximization occurs when MC=MR.
• Firms compete away economic competition.
• No barriers to entry.

11. Curve in Monopolistic Competition:

12. Oligopoly
• Few firms produce all or most of market
output.
• Standardized or differentiated products.
• Entry and exit is complex.
• Profits are interdependent
– Actions by any one firm will affect sales &
profits of the other firms

13. Curves in Oligopoly:

14. Globalization of Markets
• Economic integration of markets located in
nations around the world
– Provides opportunity to sell more goods &
services to foreign buyers
– Presents threat of increased competition from
foreign producers