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Economics Unit 4 - Coggle Diagram

- - - - A managed exchange rate is when the exchange rate fluctuates within a range, determined by the central bank.
      - Floating exchange rate is determined by supply and demand.
      - A fixed exchange rate is when the government ties the value of its currency to the value of another country's currency.
- - - - Based on these characteristics, there are four main types of market structures; perfect competition, monopoly, monopolistic competition, and oligopoly.
        
        An oligopoly is dominated by a few companies, where products can be both identical and differentiated. There are barriers to entry, and because of that, companies in an oligopoly can control the prices of their products. The companies are interdependent, meaning that the choices of one company can affect the shares of another. Within oligopolies, there are collusions and cartels, both of which are illegal in the U.S. as they prevent new companies from entering the market. These can result in price wars, where both companies are constantly lowering their prices, possibly to the point where neither are getting profit, in order to control more market shares.
        
        A monopolistic competition is a market structure in which there are many sellers of similar but not identical products. These have few barriers to entry and limited control over prices. The way products differ is through physicality, location, service level, and marketing.
        
        A monopoly is a situation in which a single seller is the only producer and supplier of a product in a market, eliminating any competition. This usually means that resources are scarce, or the government gives protection over the selling of a certain product. This structure has high barriers to entry, which results in low quality at higher prices and restricted choices. These were stopped in the U.S. by anti-trust laws. Not all monopolies area bad. In some situations, more than one producer means that there is a total loss in value.
        
        In perfect competition, there are many buyers and sellers of homogeneous product and few to no barriers to entry. Sellers try to keep the marginal revenue, the money gained from selling an additional unit, equal to the marginal cost, the money required to make an additional unit.