Market Structures Overview
Market Failure: Market Power
AO2·HL
Syllabus requirement
Covers perfect competition, monopoly, oligopoly, and monopolistic competition, highlighting entry barriers, number of firms, and product types.
Assessment objectives
AO2 Application and Analysis
Higher LevelThis topic is assessed at HL.
Summary
This topic explains market structure and describes the characteristics of perfect competition, a market structure with many firms, homogeneous products, free entry and exit, perfect information and price-taking behaviour. Understanding these characteristics helps predict how firms, consumers and governments will behave when firms have little or no market power and why perfect competition is used as a benchmark in microeconomic analysis.
