Market Assumptions

This is a recap of the review class and could serve as notes on what to keep in mind on the 4 market models. While 4 models may seem like a lot to memorize, try and think of everything as either flowing from or contradicting the assumptions of perfect competition.

Remember the 4 assumptions

1) Many buyers and sellers
2) Perfect information
3) Easy entry/exist
4) Homogenous product.

Monopolistic competition deviates from assumption 4.

Monopoly deviates from 1 and 3

and Oligopoly deviates from 1 and 3, though to a lesser extent (since there is more than one firm, and there is possible entry/exit). 4 is also likely violated, as in monopolistic competition (think the Video Console industry or Flat Panel TV's).