What are the four market types? Explain the distinguishing characteristics of each.
Economists identify four market types: 1. Perfect competition is a market with many firms, each selling an identical product. There are many buyers and no restrictions on entry of new firms. Firms and buyers are all well informed of prices and products of all firms in the industry. 2. Monopolistic competition is a market with many firms that produce similar but slightly different goods. 3. Oligopoly is a market in which a small number of firms compete and each firm may produce almost identical or differentiated goods. 4. Monopoly is a market in which only one firm produces the entire output of the industry. There are no close substitutes for the monopolist's product and there are barriers to entry that protect the firm from competition of entering firms.