Market Structure
Market structure is defined as the particular environment of a firm, the characteristics of which influence the firm's pricing and output decisions. There are four theories of market structure. These theories are:
Pure competition
Monopolistic competition
Oligopoly
Monopoly
Each of these theories produce some type of consumer behavior if the firm raises the price or if it reduces the price.
The theory of pure competition is a theory that is built on four assumptions: (1.)There are many sellers and many buyers, none of which is large in relation to total sales or purchases. (2.) Each firm produces and sells a homogeneous product. (3.) Buyers and sellers have all relevant information about prices, product quality, sources of supply, and so forth. (4.) Firms have easy entry and exit.
A pure competitive firm is a price taker. A price taker is a seller that does not have the ability to control the price of the product it sells; it takes the......
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