Economics: Theory and Practice, 10th Edition

CHAPTER 13

Competition and Market Structures

CHAPTER OBJECTIVES

To define a market and explain how its boundaries are determined.

To explain how a firm's pricing and profit behavior are related to the amount of competition it faces in its market.

To give the basic characteristics of the four market structures: pure competition, monopolistic competition, oligopoly, and monopoly.

To describe an individual firm's demand curve, pricing behavior, and nonprice competitive behavior in each of the four market structures.

To explain how a firm's long-run pricing and profit behavior and the degree of efficiency it achieves are affected by the amount of competition it faces in its market.

To evaluate how consumers fare and how efficiency is achieved by firms in each of the four market structures.

To explain (in an appendix) how a firm determines its profit-maximizing price and output level.

We interface with many businesses, ranging from the local sandwich shop to big box stores to huge insurance companies. Each of these businesses, like the other 31-plus million businesses in the United States, behaves differently. Some businesses have great control over the prices they charge for their products, while others have little or no control. Some spend millions of dollars on social media, advertising, and public relations, while others spend nothing. And the bottom line for some firms yields ...