Unit 5: Competition
Economists organize firms into various categories known as market structures. A monopoly is a single firm in an industry which, even in the absence of competition, still needs consumer demand to reach equilibrium. Unregulated monopolies are not efficient and charge higher prices than in a competitive market structure.
Oligopolies have only a handful of firms in an industry and may either cooperate or compete. Cooperative oligopolies can work together to charge higher prices and limit choices. Competitive oligopolies have lower prices and offer more, although limited, choices. The choice to cooperate or compete can be described using game theory, which is a set of rules and assumptions about how firms make choices.
Knowledge is power. Information is not equally and perfectly distributed to all economic agents. Firms and individuals must make choices with the limited amount of data and information available. Asymmetrical information can lead to unequal and inefficient outcomes.
Completing this unit should take you approximately 22 hours.