Business Finance
ECO204 Ashford University Market Structures Paper


ashford university

Question Description

In an eight- to 10-page paper, describe each market structure discussed in the course (perfect competition, monopolistic competition, oligopoly, monopoly), provide a real-life example of each market, and respond to the following for each market structure:

  • Indicate how high entry barriers into a market will influence:
    • Long-run profitability of the firms
    • Cost efficiency of the firms in the industry
    • Likelihood that some inefficient firms will survive
    • Incentive of entrepreneurs to develop substitutes for the product supplied by the firms
  • Are competitive pressures present in markets with high barriers to entry? Explain.
  • Describe which market structure you would prefer for selling products. Explain why and support your answer with the characteristics of that market.
  • Describe which market structure you would prefer for buying products. Explain why and support your answer with the characteristics of that market.
  • How does each market structure respond to price changes of the products that they sell? Explain whether each market structure will be selling elastic or inelastic products, and how this will affect the market price charged.
  • How does the role of the government affect each market structure’s ability to price their products?
  • How does international trade affect each market structure?

The Market Structures Final Paper

  • Must be eight to 10 double-spaced pages in length (not including title and references pages) and formatted according to APA style as outlined in the Ashford Writing Center (Links to an external site.)Links to an external site..
  • Must include a separate title page with the following:
    • Title of paper
    • Student’s name
    • Course name and number
    • Instructor’s name
    • Date submitted
  • Must use at least five scholarly sources from the Ashford University Library in addition to the course text.
  • Must document all sources in APA style as outlined in the Ashford Writing Center.
  • Must include a separate references page that is formatted according to APA style as outlined in the Ashford Writing Center.

Carefully review the Grading Rubric (Links to an external site.)Links to an external site. for the criteria that will be used to evaluate your assignment.

Final Answer

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Market structures
Student name
Course name and number
Instructor’s name
Date of submission



Market structures refer to the factors that influence the competition and prices of goods
and services in the market (Etro, 2014). There are different types of market structures. We define
a market structure according to the number of businesses, the percentage of market share of the
largest firms in the market, the nature of costs, the level of vertical integration of the enterprise,
product differentiation, demography of the market and customers’ turnover. When considering
the number of firms, it is important to include the scale of the companies and the degree of
foreign competition. Vertical integration of an industry determines how a single organization can
control the production and distribution of a product in the market.
Perfect competition is a market in which all companies sell identical products and
services, and neither of the companies can independently determine the price of the goods and
services (Etro, 2014). For a market to be in perfect competition, it must meet the following
1. All businesses in the market must be selling the same products and
2. None of the firms have the ability to set prices
3. All the companies must only command a small market share
4. The clients of the firms must be aware of the products and services and
the prices that other businesses charge for the same.
5. Entrance and withdrawal from the market are free.
Perfect competition markets are mostly theoretical. They are necessary for the academic
purpose of comparing other real word markets such as monopolies. However, agricultural
markets are almost perfectly competitive. In an agricultural market, there are numerous sellers of
agricultural products. The buyers of these products are aware of the prices in the entire market.



None of the sellers can set the prices of the products independently. If they do so, they are likely
to close shop. The agricultural markets do not require significant entry capital. Sellers can
therefore freely enter or exit the market. Agricultural markets meet all the five requirements of
the perfect competition market.
Monopolistic competition is a type of market where multiple sellers in the market sell
similar but differentiated products (Etro, 2014). The sellers achieve differentiation through
branding and different qualities. Their differentiated products are not perfect substitutes. The
vendors have the same barriers to entry into and exit out of the market. They collectively share
the responsibility of setting market prices. A business' decision does not have significant
consequences on its competitors. A prominent characteristic of firms in this market is heavy
advertising. In other words, a monopolistic market is a midpoint between monopoly and perfect
competition markets. Restaurants give a good example of a real-life monopolistic competition.
The restaurants offer the same service, but each of the restaurants delivers the service uniquely.
The quality of serv...

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