• A market is an economic system bringing together the forces of supply and demand for a particular good or service. A market consists of customers, suppliers, and channels of distribution, and mechanisms for establishing prices and effecting transactions. Ex. Money Market, Labor Market, Stock Market.
• Market Structures:
o Monopoly: A monopoly is a market condition in which a single seller controls the entire output of a particular good or service. A firm is a monopoly if it is the sole seller of its product and if its product has no close substitutes. Close substitutes are those goods that could closely take the place of a particular good; for example, a Pepsi soft drink would be a close substitute for a Coke drink, but a juice drink would not. The fundamental cause of monopoly is barriers to entry; these are technological or economic conditions of a market that raise the cost for firms wanting to enter the market above the cost for firms already in the market or otherwise make new entry difficult. If the barriers to entry prevent others firms from entering the market, there is no competition and the monopoly remains the only seller in its market. The seller is then able to set the price and output of a particular good or service.
o Pure Competition: Market condition wherein no buyer or seller has the power to alter the market price of a good or service. Characteristics of a perfectly competitive market are a large number of buyers and sellers, a homogeneous (similar) good or service, an equal awareness of prices and volume, an absence of discrimination in buying and selling, total mobility of productive resources, and complete freedom of entry. Perfect competition exists only as a theor ...