Market Structure and Market Power Flashcards

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What does market structure mean?

The way a market is set up: how many firms there are, their size, and how they compete.

What is market power?

A firm's ability to influence the price, output, or choices in a market.

What is market share?

A firm's sales as a percentage of total market sales.

What is a concentration ratio?

A measure showing how much of the market the largest firms control.

What is a competitive market?

A market with many small firms and similar products. Firms have little power and must accept the market price.

What is a monopoly?

A market where one firm dominates sales. It has strong power over price and output.

What is an oligopoly?

A market where a few large firms dominate. They have some power over price.

What is a price taker?

A firm that must sell at the market price because many rivals offer the same product.

What is a price maker?

A firm that can set its own price because it has market power.

How does the number of firms affect market power?

Fewer firms mean more market power. Many firms mean little market power.

How can strong market power affect consumers?

It can lead to higher prices, less choice, and lower quality.