I have been hired as a consultant by the mayor to look at the various market structures. In order to fully analyze the market structures I will explain in depth the different types of market structures, one example of a market structure here in Smallville, Ohio, I will also share how high entry barriers into our market will affect the profitability in the long term sense, competitive pressures that are present in high barriers to entry, the role of the government and how it affects each of the different market structures ability to price its products and the effect of international trade on each of the different market structures. This in depth look will hopefully help they mayor understand all of the market structures and how they affect the government and also how they operate.
The market structure I will begin with is perfect competition, in our text it states that perfect competition is “The market structure in which there are many sellers, and buyers, firms produce a homogeneous product and there is free entry into and exit out of the industry.” Perfect competition is considered a theoretical model (Amacher and Pate 2013, Chapter 9 section 1) In a perfect competition there is no market leader. There are six assumptions of perfect competition, they are that “there are a large number of sellers, there is a large number of buyers, that the perfectly competitive firms produce a homogenous product, there is free entry into and exit out of the market, there is perfect knowledge and workers and other resources can easily move in and out of the industry.” (Amacher and Pate 2013, Chapter 9 section 1.) There are many conditions in this market type and for the perfect competition portion they are very strict. In the ...
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