Smoking Essay, Research Paper
There are four distinct markets structures in the American economy. These four markets are, pure competition, pure monopoly, monopolistic competition, and oligopoly. These four market models differ as to the number of firms in the industry, whether those firms produce standardized products, or try to differentiate their products from those of other firms, and how easy or difficult it is for firms to enter the industry.
First, pure competition market involves a very large number of firms producing a product. In this kind of market new firms can enter the industry very easily. There is non-price competition and no price control. Although pure competition is rare in practice, it is the standard against which the efficiency of the economy and other markets models can be compared. The demand schedule faced by the individual firm is a pure competitive firm is perfectly elastic. In the long run, pure competition produces almost conditions for economic efficiency. In addition, pure competition produces products in the least costly way, and thus it is productively efficient. Pure competition also allocates resources firms, so that they produce the products most wanted by society. Pure competition provides consumers with the largest utility surplus that is consistent with keeping the product price low and in continuing production. However, a purely competitive economy might not provide a sufficient range of product choice for consumers because pure competition is characterized by product standardization and do not promote a wide range of types, styles and products which would allow the consumers to fulfill their preferences. Some examples of a pure competition industry of a pure competition industry are agriculture produce, and foreign exchange.
Another market structure is pure monopoly, which involves a single firm, which is the only producer of a product for which there are no good or close substitutes. The consumer who does not buy the product from the monopolist has no alternative, but to without it. Like pure competition, pure monopoly is rarely found in the United States Economy. However, important industries such as those providing utilities like electricity, cable television, or local telephone services are close to being pure monopolies, and they play a very important role in the allocation of resources and the production of goods and services in the economy. The pure monopolist is a price maker ; which means the firm exercises considerable control over price because it is responsible for it, so it controls the total…
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